Introduction

Why Develop Autopilot?

Providing liquidity in DeFi, particularly to correlated trading pairs such as ETH LSTs/LRTs and stablecoins on decentralized exchanges (DEXs), or to lending markets like AAVE, Fluid, and Morpho, can be an extremely efficient onchain way to earn additional yield on one's assets. Despite this, it comes with many complexities to achieve that efficiency. Tokemak's Autopilot was developed to address the many challenges liquidity providers (LPs) face when optimizing for best performance. No protocol currently offers fully autonomous, transparent and sophisticated rebalance solution focused solely on liquidity provision. This dedicated approach offers great value not only to LPs, but also to a wide range of other ecosystem participants, making LP accessible.

The Status Quo for LPs

Liquidity providers (LPs) face a highly complex decision-making process when seeking to optimally rebalance their LP positions. It requires an LP to account for a complex set of factors, including but not limited to:

• variance of yields and their composition;

• different fee and reward systems;

• offsetting various costs such as gas, slippage, and trading fees;

• different AMM models.

Differentiating between AMM models warrants highlighting, as its complexity is an often neglected core challenge of manual liquidity provision. Additional factors complicating the process include the significant amount of time LPs must spend researching opportunities and interacting with multiple protocols, making the process time-consuming and cumbersome. Even without considering these problems, the high costs of rebalancing and compounding often lead to underperformance and can prevent LPs from participating altogether.