Idle Liquidity

Idle Liquidity module

The Idle liquidity module allows users to deploy idle liquidity in other protocols to get additional yields. We noticed that approximately 10–15% of liquidity is positioned out-of-range (this is, in particular, true for major pairs such as ETH-USDC).

At the time of writing, the TVL of concentrated liquidity was over $10 billion, making idle liquidity a substantial opportunity for optimizers. Concentrated liquidity is about efficiency; in an efficient market, all Uniswap liquidity should be active.

Users may leave out-of-range liquidity for mainly two reasons:

• Placing orders.

• Waiting for the price to come back in range to mitigate impermanent loss.

In both cases, the liquidity can be put to work into other protocols.

Orbit allows users to lend idle liquidity to borrow-lend markets, starting from Aave (figure 1).

Figure 1: idle liquidity moved to Aave

Once the price comes back in the range (figure 2), the Aave position is closed, and the Uniswap position is opened.

Figure 2: Aave position closed, Uni position opened.