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.
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.
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.
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.