What if AMMs Could Lend?

Likwid, a new DeFi protocol built on Monad, is pioneering a unified model that merges Automated Market Makers (AMMs) with lending platforms. This integration addresses inefficiencies in traditional DeFi, where separate systems for trading and borrowing lead to underutilized capital and complex leverage workflows. Likwid’s constant-product AMM formula introduces “synthetic” reserves to represent borrowed assets, enabling atomic borrowing and swapping within the same pool. The protocol also includes safeguards like a truncated oracle to prevent manipulation from short-term price spikes and a timed liquidity withdrawal mechanism to reduce exit pressure during volatile periods.

Key Ideas

Likwid combines AMMs and lending into one system, enabling permissionless margin trading without external oracles or governance.
Security features include a truncated oracle and controlled liquidity withdrawals to protect against manipulation and bank-run scenarios.

Why It Matters?

The technology allows to create frictionless DeFi products that unify trading and lending, simplifying leverage and improving capital efficiency. These solutions can appeal to users seeking streamlined access to margin and better price discovery without navigating multiple platforms.