NIL (No Impermanent Loss) is a structured product protocol that enables users to go long or short impermanent loss on a given AMM token pair.
NIL utilizes a new crypto derivative and DeFi primitive (NIL contract) with a payout function that perfectly replicates the impermanent loss value (ILV) on a given AMM LP position using price oracles. Participants can use NIL contracts to go long/short impermanent loss in order to generate returns or hedge their LP positions.
Liquidity providers on AMMs can open NIL contracts to fully hedge out impermanent loss risk on their LP positions. Writers provide collateral that acts as impermanent loss protection, and receive an attractive market-neutral return through funding payments from Buyers.
Only a tiny fraction (0.003%) of the total value in the world is listed on AMMs today, yet there are already tens of billions of dollars in TVL across DEXs that are not protected against impermanent loss. As crypto continues to grow, more and more assets will become tokenized and exchanged in a permissionless and decentralized fashion. However, providing AMM liquidity comes at a cost.
NIL transforms the hidden, and often misunderstood, risk of impermanent loss into something tractable and predictable. We're creating a new type of financial derivative, tailor-made for crypto use cases. In doing so, the next waves of assets and markets can flourish on-chain.