> For the complete documentation index, see [llms.txt](https://own-protocol.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://own-protocol.gitbook.io/docs/market-making-yield.md).

# Market-Making Yield

## Active Management is the Alpha?

Most DeFi protocols promise passive yield. But in **Own Protocol**, active LPs can earn **significantly more** through a unique opportunity: **market making**.

Because LPs **hold the underlying asset off-chain**, they can **arbitrage price differences during rebalancing** — capturing real PnL, beyond the floating interest paid by users.

It’s not just about underwriting exposure.\
It’s about **trading the asset smartly**, and **submitting rebalance prices strategically**.

This is where skilled LPs thrive.

### How It Works: Oracle-Guarded, LP-Guided

Each asset has a daily OHLC (Open, High, Low, Close) range published by the protocol’s oracle. LPs must submit a rebalance price **within** the Open & Close range. But they get to **choose** where within the range to submit.

This opens the door to:

* Buy/sell off-chain at best market prices
* Submit a slightly higher or lower price on-chain (within bounds)
* Pocket the **difference** as spread profit

### Real-World Mechanics

#### Scenario 1: Price Rises, LP Sells High, Reports Low

* Buys 500 units at $100 → Cost = $50,000
* Price rises to $104
* LP sells off-chain at $104 = $52,000
* Submits a rebalance price of $102
* Protocol updates synthetic exposure to $102 × 500 = $51,000
* **Profit = $1,000**

#### Scenario 2: Price Falls, LP Buys Low, Reports High

* Buys 500 units at $100
* Price drops to $96 → Buys more at $96 = $48,000
* Submits rebalance price of $98
* Synthetic exposure = $49,000
* **Profit = $1,000**

### Why It Matters

* You’re delta-neutral, but not idle
* Every daily rebalance is an opportunity
* 0.1% spread per day? That’s **\~25% APY** — on top of protocol yield

Even conservatively, LPs can earn 12**–24%** annually **on top of protocol interest**, purely from market-making.

And unlike typical AMM impermanent loss, these profits are **realized** and **delta-neutral**, since LPs are hedged.