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.