Steer Protocol x Allora/The New Era of Predictive Automated Liquidity Management I often post summaries with English subtitles for the projects I frequently talk about. This serves the purpose of studying English, but it also allows me to learn a lot while summarizing. Today, I summarized the podcast held yesterday between Allora @AlloraNetwork and Steer Protocol. One-line summary: The era has come where AI reads the market, and my assets move before I do. 1. The Long-standing Challenge in DeFi/Liquidity Management As the number of DEXs has increased, the importance of liquidity providers (LPs) has grown, but there has been a common concern in the field: Where, when, and how much liquidity should I allocate? The "Concentrated Liquidity" structure introduced by Uniswap V3 provided a sophisticated answer to this question, but it also significantly increased the complexity of management. This is where Steer Protocol comes in, which is an Automated Liquidity Manager (ALM). Steer automatically adjusts liquidity and helps maintain optimal fee ranges without LPs needing to rebalance manually. With over 20 strategies in the industry (compared to an average of 3-4 among competitors), Steer has established itself as a critical component of DEX infrastructure across major chains like Arbitrum, Avalanche, and Base. 2. Meeting with Allora/The Dawn of Predictive Liquidity In the second half of 2024, Steer partnered with Allora Network, marking a significant evolution in ALM. Allora employs an ensemble prediction (gML) structure that combines multiple AI models. In other words, each model learns how to interpret the market and dynamically reflects the direction with the highest reliability in real-time. As this data is integrated into Steer’s liquidity strategy, rebalancing has shifted from "reactive" to "proactive prediction." Adjusting positions before market direction changes Mitigating LVR (Loss vs Rebalance) and IL (Impermanent Loss) risks Increased fee efficiency and capital preservation As a result, Allora's predictive-based strategy reportedly showed an average improvement of 2-2.3 times in returns compared to Steer's existing classic strategies. (Source: Steer Official Blog) 3. The Hook Craze, But Reality Is Harsh Another keyword that gained attention in the DeFi industry this year is "Hook," a new structure introduced by Uniswap V4. Hooks enable "automatic condition execution after transactions" on smart contracts, providing great flexibility. However, in reality, security risks and routing complexities pose significant obstacles. In an interview, Steer’s CEO stated: "Hooks are overhyped. Only a few with true PMF (Product Market Fit) will survive." This means that the validated practical value of ALM strategies is more important than Hooks themselves. 4. The Intersection of AI and DeFi/Not Trading, But Risk Management Many projects these days promote AI automated trading and AI trading, but the direction of Steer and Allora is completely different. AI is not just a tool to predict the "next price" but is utilized as an automated engine to detect and respond to risks in advance. Emotional predictions based on LLMs (like ChatGPT) are inefficient. Efficient rebalancing and risk mitigation through data-driven predictive signals. In other words, AI plays the most practical role in DeFi as a risk manager, not a trader. 5. On-Chain Payment Innovation/The Emergence of X402 and Google AP2 Meanwhile, Steer has recently shown interest in the "Payment Standard (X402)." This standard is being implemented on the NEAR chain and aims to simplify on-chain payments to the level of existing web payments. Google's AP2 standard is expected to evolve based on X402, accelerating UX innovation for on-chain payments, subscriptions, and commerce. Ultimately, DeFi is evolving from a "financial experiment" to a "real-life financial tool." Steer Protocol x Allora/The New Era of Predictive Automated Liquidity Management AI now reads the market and your assets move before you do.

@MichaelZski of @AlloraLabsHQ is joined by @DerekBarrera , Founder of @steerprotocol , to discuss predictive liquidity, AI-powered vaults, and the future of DeFAI.