Yuzu & Canopy: A Strategic Partnership for Automated Liquidity Strategies

4 min readFeb 18, 2025

Introduction

Liquidity management in DeFi can be complex, requiring constant adjustments to optimize returns. Yuzu has partnered up with Canopy to simplify this process through automation. By integrating Canopy’s Strategy Vaults with Yuzu’s Concentrated Liquidity Market Maker (CLMM), this partnership provides liquidity providers with efficient tools to manage capital more effectively. Whether you’re looking to improve yield generation or streamline liquidity deployment, this collaboration offers a structured and accessible solution.

What is Canopy?

Canopy is an all-in-one yield management platform built on the Movement Network. It aims to optimize liquidity management by providing users with automated strategies that navigate the complexities of DeFi protocols. By integrating various layers — Application, Rewards, Strategy, and Protocol — Canopy creates a seamless experience for liquidity providers.

Understanding Vault Strategies

Liquidity strategy vaults are automated financial tools designed to optimize returns on deposited assets. These vaults work by deploying capital into various DeFi protocols, adjusting positions based on predefined strategies, and automatically reinvesting yields to maximize efficiency.

Benefits of Vault Strategies

Automation: Reduces the need for constant manual management by automatically adjusting liquidity positions.
Yield Optimization: Ensures that liquidity is deployed efficiently across multiple pools or protocols.
Risk Management: Strategies help mitigate exposure to risks such as impermanent loss and market fluctuations.
Gas Efficiency: Vaults aggregate transactions, reducing individual gas costs for users.

Types of Vault Strategies

Yield Farming Vaults: Deploy assets into liquidity pools that generate yield from trading fees and rewards.
Lending & Borrowing Strategies: Utilize lending platforms to earn interest or leverage assets for additional returns.
Market-Making Strategies: Provide liquidity in AMMs or CLMMs to capture fees from trading activities.
Algorithmic Allocation: Uses smart algorithms to shift liquidity dynamically based on market trends.

The Four Layers of Canopy

Application Layer: A user-friendly interface that allows effortless deployment of yield-generating liquidity. Users can explore and select from a curated list of vaults and strategies, track performance, and manage their portfolios with ease.
Rewards Layer: Enables projects to create customizable campaigns, incentivizing liquidity provision using $MOVE or project-specific tokens. This fosters sustainable growth and aligns user participation with project goals.
Strategy Layer: Comprises smart contracts that define optimal liquidity flows across the Movement network. Strategies include Leveraged Liquid Staking, Borrow Optimization, and Single-Sided Liquidity, each tailored to maximize yields under different market conditions.
Protocol Layer: Integrates with Automated Market Makers (AMMs), lending platforms, perpetual DEXs (PerpDEXs), and staking platforms, providing a robust foundation for liquidity operations.

Canopy’s Strategy Vaults Explained

Strategy Vaults are at the heart of Canopy’s offering, enabling users to participate in sophisticated liquidity strategies without the need for constant manual intervention. These vaults abstract the complexities of liquidity provision and employ automated on-chain liquidity management (ALM) strategies to optimize returns.

Key Features of Canopy’s Strategy Vaults

Single-Sided Liquidity Provision: Users can provide liquidity with a single asset, simplifying the process and reducing exposure to impermanent loss.
Automated Strategies: Built-in ALM strategies such as YieldIQ, MedianStable, Flip, and Ascend dynamically adjust liquidity allocations based on market conditions, aiming to maximize yields.

Yuzu & Canopy: A Strategic Partnership for Advanced Liquidity Provision

Yuzu has partnered up with Canopy to develop LP strategy vaults on top of liquidity pools in Yuzu’s CLMM. This collaboration brings more efficiency and automation to liquidity provisioning, allowing users to benefit from optimized capital deployment without constant manual adjustments.

How This Partnership Benefits Liquidity Providers:

Automated liquidity adjustments: Ensures capital remains optimally positioned within active trading ranges.
Smart vault strategies: Enhances returns by leveraging market trends and ALM strategies.
Seamless integration with Yuzu’s CLMM: Making liquidity provision more accessible and profitable for all users.

By combining Yuzu’s CLMM model with Canopy’s automation expertise, liquidity providers gain access to a structured, hands-free solution that helps them manage their capital more effectively.

Conclusion

Canopy’s automated liquidity strategies and deep integration with Yuzu present a valuable opportunity for DeFi liquidity providers. Whether you’re an active trader or a passive investor, Canopy’s Strategy Vaults ensure efficient capital allocation, optimized fee earnings, and minimized risk exposure.

Key Takeaways:

✅ Canopy simplifies liquidity management with automated vaults.
✅ Users can deploy single-sided liquidity and benefit from ALM strategies.
✅ The Yuzu-Canopy partnership enhances yield potential for liquidity providers.
✅ Strategy Vaults reduce manual management while maximizing returns.

🔗 Ready to enhance your liquidity strategy? Get started with Canopy Strategy Vaults and Yuzu’s CLMM-powered liquidity pools today! 🚀