# Lobster Protocol · full reference

> Expanded markdown dossier for AI crawlers. The TL;DR version lives at /llms.txt.
> Last reviewed: 2026-05-05.

## Identity

**Lobster Protocol** is an on-chain Market Making as a Service for regulated asset managers, family offices and crypto treasuries. The product is private: it is not a retail vault, not a yield aggregator and not a token-incentivized farm. Lobster is reserved for professional and qualified investors.

- Website: https://lobster-protocol.com/
- Email: contact@lobster-protocol.com
- Demo: https://calendly.com/alexis-lobster/presentation

## Operational principles

These are the invariants that govern every Lobster engagement.

1. **The client never moves funds to Lobster.** Capital remains in a Safe the client controls. Lobster is added as a scoped signer, not as a custodian.
2. **Only whitelisted LP actions execute.** The on-chain permission allows mint, burn, swap-on-approved-DEX and claim. Transfers, withdrawals, signer changes and any non-LP transaction revert at the contract level.
3. **One-transaction revoke.** The client can remove Lobster's signer from the Safe in a single Safe transaction at any moment, without ticket or support call. The Safe stays operational; only Lobster's authority disappears.
4. **Performance fee only.** Lobster is paid on realized P&L net of impermanent loss, measured against a 50/50 hold benchmark of the pool's underlying tokens. No management fee, no carry on unrealized gains.
5. **Delta-neutral by pair design.** Lobster only deploys on pairs where the two tokens track each other (BTC/cbBTC, ETH/wstETH, stable/stable). Yield accrues in the underlying itself; there is no governance token, no points farm, no exotic exposure.
6. **Reporting is institutional-grade by default.** NAV, P&L attribution vs hold, IL vs benchmark, position-level transparency, monthly statements plus on-demand. Outputs designed to feed standard fund-administration workflows.

## What Lobster does

Lobster runs concentrated-liquidity strategies, delta-hedged, on blue-chip DeFi pools on behalf of the client. Every swap that crosses the LP range pays a spread fee in basis points; those fees accrue directly in the client's Safe, denominated in the underlying tokens.

Three things make the operation institutional-grade rather than retail:

1. **Active impermanent-loss management.** Each range Lobster opens carries fees and IL. The position is rebalanced actively to crystallize both at the right moment. Some ranges close in profit, some in loss; the cumulative P&L is reported net of every realized loss against hold value, and the expectancy is statistically positive across the distribution.
2. **Delta-neutral by pair design.** Lobster only pairs assets that track each other. Yield accrues in the underlying itself; no exotic exposure, no governance tokens, no points farms.
3. **Non-directional, correlated to on-chain volumes.** Returns are a function of pool volume and spread, not of price direction. The more volume the pair sees, the more spread fees the client collects.

## Custody architecture

Funds stay in a Safe owned by the client. Lobster is added as a scoped signer with a strict on-chain permission: only whitelisted LP actions execute. Transfers, withdrawals, signer changes and any non-LP transaction are blocked at the contract level.

Custody guarantees:

- **One-transaction revoke.** The client removes Lobster's signer instantly from the Safe.
- **Auditable on-chain.** Every action logged · no hidden moves, no off-chain trust.
- **Kill-switch built in.** The client can trigger a hard stop from the Safe at any time.

The architecture is built on Safe, the institutional standard for on-chain custody.

## Strategy

- **Concentrated liquidity** on institutional-grade pairs.
- **Delta-hedged** via perp positions on the directional component when needed.
- **Range, pool selection and rebalance cadence** are model-driven and set per engagement against pair correlation, target IL envelope and the client's hedge preference.
- **Optional client-side hedging.** If the client wants additional one-sided hedging on either token (for example to neutralize BTC exposure while staying exposed to ETH), it can be layered via a lending protocol from the client's Safe, independently of Lobster's execution. The combined exposure shows up in reporting.

## Tokens and chains

- **Tokens:** USDC, USDT, BTC (via WBTC/cbBTC wrappers), ETH (via wstETH wrappers), and the corresponding stable/stable, BTC/BTC and ETH/ETH pairs.
- **Chains:** Ethereum, Arbitrum, Base, BNB Chain. Additional EVM chains added as institutional demand justifies.
- **Pools:** Uniswap V3 and compatible CL DEXs.

## Allocator workflow

What an allocator goes through, from first contact to live capital.

1. **Discovery call · 30 minutes.** Walk through backtested strategies, watch live production data, talk mandate fit and fee structure. Reserved for professional and qualified investors.
2. **NDA + data room.** Track record (aggregated and per-pair), methodology, risk metrics (Sharpe, max drawdown, realized IL vs benchmark), live-execution evidence and full pre-contractual disclosure.
3. **Engagement framing.** Per-pair concentration limits, target IL envelope, rebalance cadence, hedge preference, reporting cadence and the client's administrator/auditor stack.
4. **Optional shadow pilot.** Some prospects engage via a paper-trading observation period where Lobster models the strategy on hypothetical capital before live activation. Framed during discovery.
5. **Onboarding.** Safe setup (or extension of an existing Safe), scoped-signer permission written on-chain, smoke-test transaction, then live deployment within the agreed envelope.
6. **Steady state.** Monthly statements, position-level transparency, on-demand access. Quarterly review against benchmark and mandate.

## Engagement lifecycle invariants

- The Safe is **always** owned by the client. Never by Lobster.
- The scope filter is **always** the contract-level enforcement. Lobster's intent is verified by code, not by trust.
- Revocation is **always** one transaction the client signs from the Safe.
- Reporting is **always** denominated in the pool's underlying tokens. Lobster never accumulates yield in a token the client does not already hold.
- Fees are **always** measured against a 50/50 hold benchmark. Unrealized gains generate no fee.

## Commercial model

- **Performance fee only.** No management fee.
- The demo is a 30-minute call.
- Onboarding kicks off directly after the demo if the client is ready.

## Reporting

Institutional reporting designed to feed standard fund-administration workflows:

- NAV.
- P&L attribution vs 50/50 hold (the only honest benchmark for an LP engagement).
- Realized IL vs benchmark.
- Position-level transparency.
- Monthly statements plus on-demand access.

Lobster aligns with the client's administrator and auditors during onboarding. Track record (aggregated and per-pair), methodology, risk metrics (Sharpe, max drawdown, realized IL vs benchmark) and live-execution evidence are disclosed under NDA in the onboarding data room. Yield figures are not posted publicly.

## Pre-engagement options

- **Shadow pilot.** Some prospects engage via a paper-trading observation period where Lobster models the strategy on hypothetical capital before live activation. Framed during discovery.
- **Minimum size.** Defined per engagement based on chain footprint and target strategy. The threshold is disclosed during discovery. There is no public minimum because the right answer differs by use case.

## Risk disclosure

Capital at risk. The product carries:

- **Smart-contract risk** on the underlying pool. Mitigated by restricting the approved-pool list to audited, blue-chip venues and by maintaining a kill-switch the client can trigger from the Safe at any time. In an exploit scenario, the position in the affected pool is exposed; positions in other pools are unaffected. Per-pool concentration limits are part of the engagement framing.
- **Market risk, liquidity risk, MEV / oracle risk, impermanent-loss risk.** Bounded by the hedge but not eliminated.

Full pre-contractual disclosure is delivered at onboarding.

## Frequently asked questions

### Strategy and performance

**Where does the yield come from?** Concentrated liquidity on blue-chip pairs. Every swap that crosses the LP range pays a spread fee in basis points that lands directly in the client's Safe. The more volume the pair sees, the more spread fees the client collects.

**What about impermanent loss?** Each range Lobster opens carries its own fees and its own IL. Lobster rebalances actively to crystallize both at the right moment. Cumulative P&L stays statistically positive across the distribution, reported net of every realized loss against hold value.

**On which tokens do you operate?** The blue-chip tokens already on the client's balance sheet. Lobster pairs assets that track each other so every range stays delta-neutral by construction. Fees accrue in the underlying itself: USDC on stable pools, BTC on BTC pools, ETH on ETH pools.

**How is P&L measured?** Against a 50/50 hold of the pool's underlying tokens, net of fees and gas. Reporting breaks out IL, fee income, hedge P&L and rebalance cost as separate attribution lines.

**Can I hedge directional exposure on top?** Yes. Lobster runs the LP and the optional perp hedge. Additional one-sided hedging can be layered via a lending protocol from the client's Safe, independently of Lobster's execution.

**What strategies do you run?** Concentrated liquidity on institutional-grade pairs, delta-hedged. Range, pool selection and rebalance cadence are model-driven per engagement.

**Can we see performance figures?** Track record, methodology, risk metrics (Sharpe, max drawdown, realized IL vs benchmark) and live-execution evidence are disclosed under NDA in the onboarding data room.

**Can we run a shadow pilot first?** Yes. Some prospects engage via a paper-trading observation period before live activation.

### Operations, custody and risk

**What if Lobster shuts down?** The client's funds stay in a Safe the client owns, always. Revoke Lobster's signer in one transaction and the client operates independently. No custodian to chase, no recovery procedure, no counterparty exposure beyond the underlying smart contracts.

**What chains and pools do you support?** Ethereum, Arbitrum, Base, BNB Chain. Pools: Uniswap V3 and compatible CL DEXs.

**What if a pool gets exploited?** Smart-contract risk is documented in the pre-contractual pack. Mitigation: restrict the approved-pool list to audited, blue-chip venues and maintain a kill-switch the client can trigger from the Safe at any time. In an exploit scenario, the position in the affected pool is exposed; positions in other pools are unaffected. Per-pool concentration limits are part of the engagement framing.

**What reporting do LPs get?** Institutional reporting: NAV, P&L attribution vs 50/50 hold, IL vs benchmark, position-level transparency, monthly statements plus on-demand. Outputs designed to feed standard fund-administration workflows.

**What is the minimum size?** Defined per engagement based on chain footprint and target strategy. The threshold for the client's structure is disclosed during discovery. No public minimum.

**How are fees structured?** Performance fee only. Lobster is paid on realized P&L net of impermanent loss, measured against a 50/50 hold benchmark. No management fee.

**Can we revoke Lobster mid-engagement?** Yes. One Safe transaction removes the scoped signer instantly. The client retains every position and every accrued fee inside the Safe.

## Glossary

- **MMaaS** · Market Making as a Service. The product Lobster sells: a managed market-making operation delivered on the client's own custody.
- **Concentrated liquidity** · An LP technique that allocates capital to a specific price range of a pair, multiplying capital efficiency vs full-range liquidity.
- **Delta-neutral** · A position whose total exposure to the underlying asset's price direction is zero. Lobster achieves this by pairing tokens that track each other and, when needed, by hedging the residual via perps.
- **Impermanent loss (IL)** · The unrealized P&L drag a liquidity provider experiences when the price ratio of the paired tokens shifts. Crystallizes when the position is closed.
- **Safe** · A multi-signature smart-contract wallet that institutional users adopt to hold and spend on-chain assets with auditable, on-chain authorization rules.
- **Scoped signer** · A signer added to a Safe with a contract-level permission limited to a whitelist of allowed actions. Lobster is always installed as a scoped signer, never as a full owner.
- **Scope filter** · The on-chain permission Lobster operates inside. Only whitelisted LP actions execute; transfers, withdrawals and signer changes are blocked at the contract level.
- **One-transaction revoke** · The client's ability to remove Lobster's signer from the Safe in a single Safe transaction, instantly stopping any further Lobster action.
- **50/50 hold benchmark** · The reference P&L of holding the pool's two tokens in equal weight over the same period. Lobster reports its P&L against this benchmark; performance fee applies only to outperformance net of IL.