This guide gives an overview of providing passive liquidity to Connext after the Amarok network upgrade.

Contents

• Summary
• What is Amarok?
• Transaction Flow
• Risks & Security
• Profit Model
• How to LP (Guide - coming)

Summary

• After the Amarok upgrade, Connext requires passive liquidity provision into stableswap AMMs in order to function.
• This liquidity is used to ensure that the user gets the correct asset on each chain and determines pricing within the network - we are starting with ETH and USDC as assets.
• Like with other stableswaps, passive LPing in Connext is very low risk. Assets are priced against a representation of themselves on mainnet - this means no impermanent loss or inventory risk. The only risk is the implementation risk of the protocol itself.
• Also like other stableswaps, passive LPing in Connext is quite lucrative. If we reach a volume comparable with the average competitor, we estimate a 4-16% return on provided liquidity.

What is Amarok?

Amarok is an upgrade to Connext that improves the network in the following ways:

1. Modularizes Connext, allowing it to plug into external systems for lower level message transport + verification, including rollups, AMBs, and IBC.
2. Enables generalized communication between domains.
3. Simplifies developer integrations by removing the need for client-side offchain dependencies.
4. Simplifies router liquidity management by removing the need for routers to rebalance their inventory between chains.
5. Introduces passive LPing via stableswap AMMs that price inventory of canonical assets on each chain against nextAssets (assets locked and accounted for within the system on their home chain).