The problem Fundamental Liquidity solves

LPs lack profitability despite numerous automation tools. Hence, Token projects often list on CEXs, because DEXs lack liquidity. Most significant LP losses occur at market inflection points: Entering positions at inflated token valuations, Withdrawing during market corrections, Fee income fails to offset impermanent loss

Problem: Current tools focus on automation & rebalancing but lack fundamental valuation frameworks && proven market making strategies!

Solution: Incentivize professional Strategy Creators to create: Fundamental hi/lo price targets for projects with sound tokenomics, Long-term sustainable strategies avoiding too frequent rebalancing, including Custom v4 hooks with proven market making technics aligned with the chosen strategy to improve profitability.
Retail LPs then can easily choose && deploy profitable off the shelf professional LP strategies. Help to grow sustainable DEX liquidity with long-term oriented positions that result in a better DEX price discovery.

Abstracting the complexity of this strategy away via a simple UI will further help to drive new users into DeFi, which cannot or do not want to work through the still complex DeFi landscape to be profitable in the long-term.

The project architecture and development process

Project Architecture & Development Process Summary

Overview

The Fundamental LP project integrates TradFi valuation frameworks into DeFi market-making to improve Uniswap LP profitability. Current tools focus on automation & rebalancing but lack fundamental valuation and proven strategies. This project enables long-term LP strategies to enhance DEX liquidity and price discovery.

Core Functionality

• Strategy Creators:
  • Develop fundamental hi/lo price targets for tokens.
  • Implement long-term LP strategies with custom Uniswap v4 hooks.
• Retail LPs:
  • Easily select & deploy professional LP strategies.
  • Help grow sustainable DEX liquidity and improve price discovery.
  • Incentivize creators via performance fees.

Key Implementation Details

PriceImpact Hook (Sepolia Testnet)

A dynamic fee hook to protect LPs from harmful price impact.

• Address: 0x5b62378779eDcf9e905450Ef8769fdcf7b2CA080
• Mechanism:
  • Estimates price impact before each swap.
  • Adjusts fees dynamically:
    • Higher fees for arbitrage trades.
    • Lower fees for retail trades.
• GitHub: PriceImpact Hook

Key Next Steps

• Apply for Uniswap Hook Incubator to expand development.
• Develop additional market-making hooks, including:
  • Dynamic fee-setting based on volatility & order flow.
  • Mean-reversion strategies for fundamentally valued pairs.
  • Dynamic range adjustments using on-chain data.
• Gather early Strategy Creators and deploy a user-friendly UI.

Conclusion

The Fundamental LP project merges fundamental valuation models with smart contract automation, creating profitable, sustainable liquidity provision for DeFi.

Product Integrations

Uniswap-v4-template to develop hooks
Initial tests with Scaffold-ETH 2 for user interface, but not far advanced
Figma for Architecture design

Key differentiators and uniqueness of the project

The focus on fundamental principles and proven technics and making them available to users instead of just another automation tood.

Trade-offs and shortcuts while building

Trade-off is that you will need proper incentives for creators and skin in the game. Further, it will be requried to anstract the complexity away from the end user.

Additional Features

Was build after I completed campBUIDL