Overview

Participants

Stacking Salmon has two distinct users: passive investors and market makers.

Passive Investoors

Passive investoors provide assets to the lending markets in Stacking Salmon's "Earn" feature. These users are the backbone of Stacking Salmon, and include anyone interested in earning yield on their assets. Due to Kodiak V3's deep liquidity and numerous listed trading pairs, almost any asset can be used in a Stacking Salmon lending market.

Passive investors are not responsible for market making strategies. They are responsible, however, for assessing risks and monitoring the health of their chosen lending market and of the underlying Kodiak V3 pair.

Market Makoors

Market makoors are the sophisticated users that deploy capital from lending markets into their chosen trading pair, executing LP strategies for profit. These users are significantly right curve and take advantage of the many yield opportunities present in DeFi. If you are a prop shop, existing market maker, or MEV searcher, using Stacking Salmon's "Stack" feature can amplify your returns while making it more capital efficient to hedge.

Market makers interact with Stack through Tackle Boxes, which are special, user-owned contracts that have permission to borrow from the lending markets. These accounts present an interface to their owner, allowing them to control borrow amounts and Kodiak V3 position creation. When positions are closed, earned fees are collected in margin balances, which can ultimately be withdrawn by the market makers.

Components

Stack consists of two distinct components - lending markets and Tackle Boxes.

Lending Markets

Lending markets make up the backbone of the system, and are where passive investors’ deposits are directed. Each lending market is isolated to a Kodiak V3 pair. For example, a BERA/USDC lending market would only support two assets for deposit and withdraw: BERA and USDC. Lending markets can be permissionlessly created and initialized for any Kodiak V3 pair.

Each lending market depends on the quality of the TWAP oracle from its associated Kodiak V3 pair. This means that pairs with less liquidity, or highly concentrated liquidity, are at risk of price manipulation attacks, and depositors should be wary of using them. However, this also means that stable, established pools are isolated from other risky pools, which gives users flexibility in their risk profile.

Tackle Boxes

Tackle Boxes are what enable borrowers to access capital for market making. Each Tackle Box is associated with the address of its owner, and can only be controlled by that address (except during liquidations).

Tackle Boxes are also associated with a specific Stacking Salmon lending market, which in turn is tied to a Kodiak V3 pair. This means that, like lending markets, Tackle Boxes only support two assets at a time.

Tackle Box deposits act as the collateral for borrows issued from Stacking Salmon lending markets. When a user wishes to create a Kodiak V3 position, a call to their Tackle Box is made that borrows funds from the lending market and deposits them into Kodiak.

Since the position remains in the custody of the Tackle Box and not its owner, the notional value of the Kodiak position can exceed that of the margin assets. The margin assets only need to cover for the losses accrued by the position (divergence loss + borrow interest), plus some additional padding for safety.