Haedal Protocol

Haedal is a liquid staking protocol built on the Sui network. It allows users to stake their SUI tokens and contribute to the governance and decentralization of the Sui blockchain.

Haedal is a protocol that provides liquid staking and liquidity management on the Sui blockchain. It allows users to stake SUI tokens and receive liquid staking tokens called haSUI, which can be used in decentralized exchanges, lending protocols, and other DeFi services.

Haedal also operates the Haedal Market Maker (HMM), an automated market maker that concentrates liquidity in specific price ranges and uses a dynamic leverage factor to adjust liquidity according to market conditions. This helps to minimize slippage for traders and ensure efficient capital use.

Key Takeaways

* Haedal is a protocol that provides liquid staking and liquidity management on the Sui blockchain.

* Users can stake SUI tokens with Haedal to receive haSUI, a liquid staking token that can be used in various DeFi services.

* Haedal also operates the Haedal Market Maker (HMM), an AMM that uses protocol-owned liquidity to provide efficient trading and enhance yields for haSUI holders.

* HMM is designed with a dynamic leverage factor to adjust liquidity according to market conditions, which helps to minimize slippage for traders and ensure efficient capital use.

What Is Haedal?

The Haedal Protocol is a decentralized finance (DeFi) platform built on the Sui blockchain. It is composed of two main modules: the liquid staking protocol and the Haedal Market Maker (HMM), a market maker designed for efficient liquidity management.

Haedal aims to merge the strengths of native liquid staking and yield strategies with an intuitive user experience, positioning it as a key pillar of the Sui DeFi ecosystem.

Liquid Staking with Haedal

How liquid staking works

Liquid staking allows users to stake assets while retaining liquidity, unlike traditional staking, where assets are locked. With Haedal, users can choose to stake SUI tokens, the native cryptocurrency of the Sui network, to help secure the blockchain. In return, they receive haSUI, a yield-bearing token that grants users proportionate voting rights in the protocol.

This token is fully liquid and can be used in other DeFi services, such as decentralized exchanges (DEXs), lending protocols, or NFT marketplaces.

Haedal offers two staking modes:

Automated Staking: The protocol selects efficient validators, simplifying the process for users with a one-click experience.

Manual Staking: Users can select specific validators based on their annual percentage yield (APY), offering more control.

Once staked, haSUI is minted and deposited into the user’s wallet.

Utility of haSUI

The haSUI token is designed to integrate seamlessly into Sui’s DeFi ecosystem. It can be used in:

DEXs: For trading or providing liquidity in pools (e.g., haSUI/SUI on Cetus DEX).

Lending protocols: As collateral or for borrowing.

NFT marketplaces: For purchasing or trading NFTs.

Stablecoin protocols: For stablecoin-related DeFi activities.

This flexibility allows users to earn staking rewards while also engaging in yield-generating DeFi strategies, promoting optimal capital efficiency.

The Haedal Market Maker (HMM)

The Haedal Market Maker (HMM) is an automated market maker (AMM) designed to optimize liquidity for haSUI and other assets on Sui. It is designed to provide deep liquidity for efficient trading and enhance yields for haSUI holders.

Unlike traditional AMMs that rely on external liquidity providers, HMM uses protocol-owned liquidity, which is initially funded by Haedal. This allows for efficient capital deployment, especially in the early stages of the protocol.

Key mechanisms of HMM

1. Dynamic liquidity concentration

Unlike traditional AMMs that distribute liquidity across an infinite price range using the constant-product formula (x * y = k), HMM concentrates liquidity within specific price ranges that are likely to see trading activity. It uses a non-linear leverage factor to adjust liquidity dynamically, aligning with real market conditions.

This helps to minimize slippage for traders and ensure efficient capital use, as liquidity is deployed where it is needed most, such as during periods of high volatility.

2. Oracle-based Pricing

HMM integrates high-frequency oracle price feeds (e.g., Pyth Network) to align its internal liquidity with real-time market prices. This reduces impermanent loss risk for liquidity providers and can even generate “impermanent profit” by capitalizing on price movements, complementing other AMMs and order books on Sui.

3. Inventory management

To maintain optimal pool balance, HMM adjusts asset prices dynamically. For example, if one asset in a pool (e.g., SUI in a SUI-USDC pair) becomes depleted due to trading activity, HMM will increase the price of that asset to encourage selling pressure and discourage further buying.

This helps to restore the equilibrium of the pool and ensure sustainable liquidity provision.

Capital efficiency and risk management

HMM leverages Sui’s high transaction-per-second (TPS) capacity to adjust liquidity rapidly in volatile pairs, which helps to minimize drawdowns in capital due to market fluctuations. Additionally, HMM is designed to be resistant