1Wave

Problem Statement

Traditional AMM liquidity pools suffer from impermanent loss (IL) due to price divergence between deposited assets. Wave's basket asset vaults implement real-time on-chain rebalancingthat maintains target weight allocations through oracle-driven price feeds, effectively neutralizing IL exposure through dynamic position management. By creating a tokenised vault and using virtual liquidity of Aqua Protocol we can automatically rebalance the virtual position and avoid exposures to impermanent losses.

Solution

The project is built on three components: Factor SDK, Aqua Protocol, and Chainlink Feeds.Using the Factor SDK, we create tokenized vaults where users deposit the same asset pair as the underlying pool. All liquidity remains inside the vault at all times, meaning the strategy pool funds in a dynamic way from the vault, reducing the risk of IL for depositors.Aqua Protocol powers WaveSwap, which lets external users swap against the vault’s liquidity without actually moving that liquidity. During each swap, Chainlink Feeds provides accurate pricing so the vault can instantly rebalance in the same transaction, maximizing capital efficiency, TWAP is applied to reduce risks.As swaps occur, the vault collects fees, causing the share price to steadily increase with trading volume.The key innovation: Aqua Protocol removes and re-adds the maximum possible liquidity (based on vault balances) immediately after each swap, atomically, ensuring continuous optimization and complete safety of funds.