Mercurial Dynamic Yield Layer: Mainnet Beta Release and Rollout Plan

Today we are delighted to announce our mainnet beta launch, the first phase of our rollout of Mercurial’s Dynamic Yield Layer. In this phase, we are launching vaults with dynamic capital allocation across the main lending platforms! To test out the vaults, users will be able to deposit up to 10K USD worth of tokens in each of these vaults.

Try out the vaults here: vaults.mercurial.finance

In future phases, we will be introducing dynamic stable pools built on top of this layer, MER staking, and allowing external protocols to integrate for yield easily. In this post, we will recap the overall design for the dynamic yield infrastructure platform that we are building and share the roadmap for rolling out the full vision for this platform.

Mercurial Yield Layer Overview

Our new Dynamic Yield Layer allows any protocol, including wallets, treasuries and Automated Market Makers (AMMs), to build on top of this layer to generate more returns for their Liquidity Providers (LPs). The liquidity of any protocol built on this yield infra can be dynamically allocated to various lending platforms.

Since yield can vary significantly across lending platforms at different times, especially for the smaller lending pools where an increase in liquidity can substantially impact and plunge their yield, it makes it challenging to monitor for maximising returns.

Hence, the algorithm will be optimizing across various parameters to allocate capital to the different lending platforms rapidly. This helps users get the safest and most secure yield possible, with the ratio adjusted dynamically every few minutes to enhance returns. This rapid capital allocation is powered by Solana’s high speed and low transaction cost, allowing us to create a much more liquid lending landscape across the whole ecosystem.

Any protocol that stores liquidity in their system, e.g. AMM pools, DAO treasuries, and wallets can interact easily with the yield layer, which allows the deposit and withdrawal of assets via the APIs in our SDK. They can provide their LPs with the yield and rewards generated from our yield layer in exchange for the liquidity deposited into it.

In addition, users who deposit into these protocols, integrated into our dynamic vaults, will be able to receive yield from the protocols, on top of the interest and LM rewards from the lending platforms. The added yield will significantly reduce LM as the primary driver of a protocol’s liquidity maintenance and growth.

Fig. 1 Mercurial Dynamic Yield Infrastructure

Example: AMM Pools Utilizing Yield Layer

Currently, the vast majority of assets in AMMs are unutilized, as only a small portion of the assets is being constantly used for swaps. As a result, the yield generated is insufficient to attract LPs; continuous LM is needed to boost LP incentives instead.

However, suppose the AMMs are built on top of the yield layer. In that case, the liquidity of the pools will be deposited in the dynamic vaults and reallocated to various lending platforms to generate additional yield for the LPs. With the added yield, we will be able to make our pools highly capital efficient and reduce the reliance on LM to sustain or grow the liquidity of the pools.

Take an example of a USDC and USDT AMM stable pool being set up on top of the yield infrastructure.

1. All the USDC/USDT tokens deposited in the AMM pool are immediately deposited into the USDC and USDT vaults in the infra layer.
2. The USDC and the USDT vaults will each keep 10% of the liquidity in the vault as reserves for the connecting AMMs to withdraw or swap tokens.
3. The remaining 90% of the tokens will be allocated to the various lending platforms integrated with the vaults. For instance, the USDC vault will distribute 90% of the USDC tokens in the vault across the pools in Port Finance, Solend and Mango to earn yield.
4. The yield optimizer will monitor and re-adjust the liquidity allocation ratio across Port Finance, Soland and Mango once every few minutes to obtain the optimal yield for the LPs.

The dormant tokens in the pools are now actively flowing and generating returns via the Yield Layer, making our pools extremely capital efficient.

Fig. 2 Flow of liquidity from AMM pool to lending platforms

Dynamic Yield Layer Rollout

Our execution roadmap is divided into 3 main phases:

• Beta: Release of Dynamic Vaults
• Launch: Launch of Mercurial Dynamic Stable Pools and MER staking
• Integrate: External Protocols Integration With Yield Layer

Fig. 3 Mercurial v2 Rollout Plan

Beta: Release Of Dynamic Vaults

In phase 1, we will be launching some key vaults, where users will be able to deposit directly into the vault for this version, and the liquidity in the pool will be distributed to the various lending platforms, starting with USDC, USDT and SOL. The first set of lending platforms connected to our vaults will be Port Finance, Solend and Mango.

Fig. 4 Dynamic Vaults

Launch: Launch Of New Dynamic Stable Pools, Audit Completion and MER Staking

For the past 11 months, Mercurial has launched several stable pools on Solana, e.g. USTv2–3Pool, USDH-3Pool etc. Our multi-token swap pools allow for very efficient liquidity pooling with multiple assets in a single pool. We are well established as one of the main DEXes in Solana, routinely doing anywhere from 10M — 20M of volume a day, and one of the top volume receivers at Jupiter.

Mercurial Dynamic Stable Pools

In this phase, we will be launching the new Mercurial dynamic stable pools that leverage the dynamic vaults, starting with USDC-USDT, UST-USDC and UST-USDT. These vaults will be able to leverage the yield layer for much better capital efficiency, vastly reducing the need for LM to sustain liquidity.

Fig.5 Mercurial Stable Pools vs Dynamic Stable Pools

Audit Completion

We will also be completing audits of the MER v2 system with 2 top tier auditing firms and open-sourcing the code shortly after.

MER Staking

As mentioned in our previous post, we will introduce MER staking, which will, feature several key yield-earning utilities, including commissions from yield earned, and $JUP tokens.

Integrate: External Protocols Integration With Yield Layer

This phase will focus on enabling integrations by external protocols with the yield layer. To make it easy for them to integrate with our Dynamic Yield Layer, we will be creating a straightforward SDK and an entire library of pre-built modules and code samples for rapid app development and plug-and-play.

Potential integrations include new AMMs, wallets, treasuries, and any protocol with passive liquidity. We have already started conversations with several great projects; please reach out if you are interested in utilizing the platform!

Summary

To recap our rollout plan.

• Beta (Present): We will be doing a Beta release of our Dynamic Vaults, where liquidity in the vaults will be allocated to various lending platforms to generate yield.
• Launch (Late Q2): In this phase, we will launch Mercurial Dynamic Stable Pools, which are AMMs built on top of the dynamic yield layer, to leverage the yield generating mechanism. We will also launch our MER staking pool.
• Integrate (Early Q3): External protocols to launch their AMM pools or dApps integrated with our dynamic yield layer.

We are still in the early release days of building out this layer — would love it if you could give it a spin and let us know what you think on our discord. discord.gg/WwFwsVtvpH