ShutterDAO Market Maker Application H20
Contact:
peter@h20.finance
Overview: A brief introduction to the individual or organization submitting the proposal, including relevant experience and qualifications.
H20 provides 100% on-chain market-making and trading strategies powered by Raindex.
H20 strategies are dynamic on-chain limit orders that can execute perpetually until withdrawn. Each strategy is like a mini DEX with its own custom curve. Tokens never leave your control. Only your project’s wallet can withdraw tokens and deploy or modify strategies. Never lose control of your tokens, tokenomics or volumes. There is no need to run bots, which means no private keys are sitting in bots connected to the Internet. Once a strategy is deployed, H20’s permissionless network of solvers will clear it against DEXes.
Key Benefits:
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100% on-chain market-making and bespoke trading strategies
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Custom-built strategies tailored to your project needs
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Sell your token without dumping the chart
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Tight peg management
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Zero third-party risk, 100% self-custody solution.
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Zero latency
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Zero slippage
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Zero gas
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Zero MEV
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100% transparent to build community trust
Zero gas justification
Once an order placer deploys their strategy onchain, it is live perpetually until removed. It is not expected that an order placer pays the gas to continually execute their strategy. Instead fillers monitor and execute trades. Fillers are incentivized to perform transactions by earning arbitrage profits and a bounty from the strategy owner. In performing transactions, fillers pay gas. Note: while individual trades do not incur gas fees for the strategy owner, deploying a strategy or interacting with vault balances are onchain transactions and require gas.
Zero MEV
All MEV is moved to the solver. By operating entirely on-chain with predefined, immutable strategies, there is no opportunity for miners or validators to exploit transaction ordering for profit. The transparency and deterministic nature of the strategies eliminate the unpredictability that MEV actors typically exploit.
Relevant links
Technical Capabilities: Details about the tools, technologies, and algorithms to be deployed for market making activities.
Auction-based DCA, which is an automated trading strategy that streams budgets through continuous price auctions to optimize token execution. The system combines dollar-cost averaging with dynamic auction pricing, automatically executes larger trades at better prices, and protects positions with configurable price limits. Its key advantages include achieving better average prices than standard DCA or limit orders, controlling market impact through intelligent budget streaming, and allowing users to simply set clear parameters and let the strategy work.
Grid Trading Strategy offers strategic sell automation to capture value while maintaining price stability. The system works by implementing predictable selling at preset price points, recharging orders sequentially to follow market movements, and revealing liquidity gradually with shy liquidity starting points. Its key advantages include controlled price management, maximized value capture in upward movements, and automated execution.
The Two-sided Dynamic Spread Strategy implements smart market making to ensure profitability through cost-basis tracking. It operates using two-sided exponential auctions that adjust to market movement, where each side’s auction bottom tracks the opposite side’s average cost, and dynamic spread sizes adapt to market conditions. The strategy’s key advantages include guaranteed profitable spreads through cost-basis accounting, efficient capture of cyclical volatility, and configurable parameters for different market dynamics.
Liquidity Commitments: A description of liquidity provision strategies, including expected depth and spreads.
Our liquidity provision combines three complementary strategies to ensure optimal market depth and spread management:
Auction-based DCA Liquidity
- Provides continuous baseline liquidity through price auctions
- Automatically adjusts trade sizes based on market conditions while maintaining configurable price limits
- Optimizes execution by streaming budgets to achieve better average prices than standard market making
- Proposal is to run this on Ethereum and an L2 (Base)
Grid-based Liquidity Management
- Establishes predictable liquidity at preset price points across a range
- Implements gradual liquidity revelation with “shy” starting points to prevent market impact
- Can automatically recharge orders sequentially as market moves to maintain consistent depth
- Proposal is to run this on Ethereum and an L2 (Base)
Two-sided Dynamic Spread Management
- Core market making engine that ensures profitable spreads through cost-basis tracking
- Utilizes exponential auctions that dynamically adjust to market movement
- Each side’s auction bottom tracks the opposite side’s average cost
- Spread sizes adapt automatically to market conditions
- Efficiently captures volatility while maintaining consistent liquidity
- Proposal is to run this on an L2 (Base)
Expand to an L2
- As well as moving to a CEX, expand SHU to an L2
- Bridge token with layerzero
- Set up a much smaller pool e.g. 10% the size of the ETH pool
- Set up wide not concentrated liquidity
- Run two-sided dynamic spread strategies
- In the future offer community ability to trade and market make on the L2 as well as ETH
Key Features:
- Built-in cost accounting ensures sustainable liquidity provision
- Multiple configurable parameters allow customization for different market dynamics
- Automated execution reduces operational overhead
- Intelligent budget streaming controls market impact
- Complementary strategies work together to maintain depth during various market conditions
Risk Management: An outline of risk management practices.
No Private Key / Bot Risk
- Traditional: Bots require private keys exposed to the internet, vulnerable to hacks
- CEX: Must trust exchange with custody of funds
- Our Solution: 100% on-chain, no private keys in bots, self-custody maintained
Technical Infrastructure
- Traditional: Must maintain own servers, APIs, and monitoring systems
- CEX: Reliant on exchange uptime and API stability
- Our Solution: Runs on blockchain, no additional infrastructure needed
Transparency
- Traditional: Limited visibility into bot operations
- CEX: Opaque internal processes
- Our Solution: 100% transparent and verifiable on-chain
This approach essentially removes many of the operational risks associated with traditional market making while maintaining full custody control of assets. Mathematical rules are enforced by smart contracts rather than relying on manual oversight or third-party systems.
Strategy specific Risk Management
- Human and system monitoring of position sizes and exposure
- Readjustment of orders based on accumulated positions
- Built-in fast exit functionality for risk mitigation during extreme market conditions
- Self-adjusting averages to maintain profitable spreads while providing consistent liquidity
Reporting: Details about reports, and reporting frequency.
Real-Time Transparency
- All transactions and strategy performance viewable on-chain in real-time
- Strategy contracts directly queryable for current positions and parameters
- Full public verifiability of all market making activities
Standard Monthly Reports Include:
Performance Metrics
- Total trading volume and number of trades
- Position rotation efficiency
Strategy Analytics
- Live links to deployed strategy contracts
- Historical trade analysis
Comparative Analysis
- Volume impact on target pairs
Custom Reporting Options:
- Daily metrics available through direct blockchain queries
- Custom dashboard access for real-time monitoring
The on-chain nature of all operations means complete auditability of every transaction and parameter change, providing unprecedented transparency compared to traditional market making approaches.
We can provide an example report on request.
Fee Structure: A transparent breakdown of the proposed compensation model.
Flat fee 2.5kusd/m or 3kusd/m in SHU
No performance fee or options contract
Alignment with Shutter DAO 0x36: Evidence of alignment with Shutter’s mission, values, and decentralized ethos. In addition, willingness to work for a true, decentralized DAO, which requires specific knowledge and capabilities.
Mission & Values Alignment Shutter DAO is committed to decentralization, transparency, and maintaining the integrity of blockchain systems. Your proposal resonates with these values through the following principles:
Self-Custody Solutions
- Shutter’s Ethos: DAOs should retain full control over their assets, avoiding reliance on centralized intermediaries.
- H20’s Offering: Tokens never leave the control of the DAO. Strategies are executed fully on-chain, ensuring DAOs maintain sovereignty over tokenomics, liquidity, and trading strategies.
On-Chain Transparency
- Shutter’s Ethos: Blockchain systems should provide verifiable, public transparency.
- H20’s Offering: All operations, strategy parameters, and trades are fully visible on-chain. Monthly reports include live links to deployed contracts and public auditability of activities.
Decentralized Operations
- Shutter’s Ethos: True decentralization demands avoiding centralized intermediaries and minimizing MEV exploitation.
- H20’s Offering: Strategies are executed on a permissionless, decentralized solver network with zero MEV exposure. Open-source smart contracts ensure extensibility and trustlessness.
DAO-Controlled Processes
- Shutter’s Ethos: Decisions and operations should be DAO-driven.
- H20’s Offering: Strategy deployment, modification, and token withdrawals are fully controlled by the DAO. No external party has access or influence over operations.
Low-Risk Infrastructure H20 addresses traditional market-making risks (e.g., centralized exchange failures, bot key exposure) through its 100% on-chain architecture. This provides operational security and transparency, essential for DAOs like Shutter DAO.
Open-Source Commitment The permissionless extensibility and open-source nature of H20’s solutions provide a foundation for innovation and collaboration. This aligns with Shutter DAO’s emphasis on collective development and decentralized governance.
References: At least two references from relevant previous engagements.
Provided on request, not for public communications