Mercurial

Market Making

Mercurial is a decentralized exchange native to the Solana blockchain. It is building the dynamic vaults for stable assets to enable low-slippage swaps and allowing liquidity providers (LPs) to leverage dynamic fees to improve profits.

Risk Rating
Watch Out
Protocol Code Quality
Protocol Maturity
Protocol Design
Summary
What we like
Mercurial offers users a highly usable and seamless user interface to swap stable assets.
What we like less
Mercurial relies on Anchor framework for quickly building Solana programs. The code is unstable, unaudited and subject to changes.
What it means for you
Offers a way to enhance your yield on stable assets with concentrated liquidity, dynamic fees to improve swap fees based on market demand, and flexible capital deployment to earn yield on idle assets.
Information
Exploit/Hacks
None
Info
  • Website
  • Token: MER
  • Tags: Market Making
Key Metrics
  • TVL: $54.9M (Rank #88)
  • TVL Ranking by Market Making: #0
  • Blockchain: Solana
  • Chain TVL
    • Solana: $54.92M
Risk Assessment
Watch Out
Protocol Code Quality
  • Code reviewed by at least one experienced auditor; Quantstamp audited in June 2022
  • Public team promotes accountability
  • No documented protocol hacks since launch
Protocol Maturity
  • Core protocol launched in 2022; maturity over one year minimizes technical risk as smart contracts are well battle-tested
  • Top 20% by total value locked slightly reduces risk
  • Core contracts can be upgraded with just an EOA wallet
  • No timelock exists or no information documented, which mean a malicious actor could approve upgrades without any delay
  • Highly concentrated voting power increases risk
Protocol Design
  • Protocol could be susceptible to negative feedback loops
  • This protocol is susceptible to risks related to decentralized exchanges (DEXs), such as impermanent loss
Things to know about Mercurial

How Mercurial works

Mercurial vaults are market making vaults that provide low slippage swaps for stable assets, while also improving LP profits with dynamic fees and flexible capital allocation. Stable pairs on traditional AMMs have high slippage, and the capital is underutilized as most assets are not needed for swaps at any given point in time. The fees are also static, which results in wasted opportunities for LPs to earn more yield when the market demand is high. Mercurial vaults solve these issues through utilizing a price curve that concentrates liquidity around a desired range, dynamic fees that leverage market conditions, and flexible capital allocation that deploys unused assets to external platforms to earn additional yield. With the amplified price curve, users who trade when the exchange rate is out of range will receive less supported liquidity. All vaults in Mercurial share the same dynamice fee program. The program will store market volume and volatility data to update the LP fees accordingly. When market volatility is high, LP fees will adjust higher to reduce impermanent loss and capture higher profits. And when market volatility is low, LP fees will be lowered to encourage trading.

How Mercurial makes money

Mercurial charges base fees and commissions from its swap and vault operations. The DAO will decide on these key future decision through community votes including whether the protocol fees will be burnt or distributed.

How you make money on Mercurial

You can earn fees from dynamic vaults by depositing stable assets to earn market making and other DeFi yield. MER holders are expected to accrue value at some point through a portion of swap fees and commisions from interest and yield accrued by the vault.