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Author Topic: Smoothy.finance - A novel single pool liquidity protocol  (Read 72 times)
zer0b1 (OP)
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September 12, 2020, 04:39:16 AM
 #1

Smoothy.finance
A novel single pool liquidity protocol specialized in same backed assets with low-cost zero-slippage swapping and maximum interest earning

DeFi industry trend
  • The DeFi industry is booming with total value locked (TVL) reached >$8 billion USD recently
  • The innovated Automated Market Maker (AMM) products with attractive returns has
    contributed a lot in the DeFi ecosystem for such explosive growth

DeFi protocol specialized in same-backed assets
  • There are multiple tokens backed by the same assets ( USD, BTC,
    GOLD etc.) with need of swapping and financial management
  • Pricing slippage can be considerably high if using Uniswap and
    there is no extra interest earned
  • Several ways are proposed to improve the slippage issue and offer
    more financial options including StableSwap (accessible via
    curve.fi) and mStable

StableSwap (Curve.fi)
Combining Uniswap invariant and constant-sum invariant
Pros:
  • Less slippage compared with uniswap

Cons:
  • Cannot guarantee 1:1 ratio for swap
  • Need iterative computation, which leads to
    Comparatively high gas fee for swapping
  • Existence of multiple pools reduces liquidity and
    increases slippage

mStable
Can perform 1:1 swap as long as the
percentage is below a predefined weight

Pros:
  • Simple
  • Can swap any token with 1:1 ratio which
    StableSwap cannot guarantee

Cons:
  • Not flexible, swap is prohibited if predefined
    weight is reached
  • Unfriendly for swap due to high gas cost
    (because all backed tokens are transferred to
    Compound/Aave)

SmoothSwap (Smoothy.finance)
Goal: single pool with low-cost zero-slippage
swapping and maximize interest earning
  • Zero slippage*
  • Swap anytime
  • Low gas fee
  • Better liquidity and LP rewards

*According to function of SmoothSwap: there will be a soft weights, If the soft weights are satisfied, 1:1 ratio swap will be performed; If not, swap
can still be executed by imposing a penalty

Method: Soft weights
  • If the soft weights are satisfied, 1:1 ratio swap
  • If not, a penalty will be imposed

Method: dynamic cash reserve algorithm
  • Unlike Curve which has multiple pools used as swap-only (sUSD Pool) and swap+save (Y Pool), there is only one pool to concentrate the liquidity for Smoothy
  • 10%* of the cash will be reserved for swapping while rest will be injected into Ytoken pool to earn interests. The rebalance will automatically take place if the % of reserved cash break range of (0%-20%)

Zero slippage
Guarantee 1:1 ratio swap for Smoothy as long as the pool is balanced
  • All percentages satisfies the weight constraints

Swap anytime
Even the weight constraints are broken, the Smoothy protocol still allows the users to swap the tokens at higher price.

Low gas fee
  • >80% lower gas fee for Smoothy based on ETH testnet compared with Curve
    and mStable
  • The low gas fee is more swap-friendly for small-amount swap requests

Better liquidity and LP rewards
  • Smoothy has one single pool to meet both needs of swapping and interest generation with low gas fee and high liquidity, thanks to dynamic cash reserve algorithm
  • Curve has multiple pools which lead to liquidity reduction, for example: sUSD pool for swap
    only and Y pool for swap and interest earning (with high tx fee for swap)

Better liquidity and LP rewards
LP can collect swap fee, penalty fee and automatically generated interest though Smoothy protocol

Features
  • Swap: Swap same-backed-asset tokens at any time with lower gas cost
  • Mint and Redeem: Conveniently provide and remove liquidity and get smooth token (sm)
  • Save: Collect rewards by depositing smooth token (sm)
  • Farm: Earn governance token (SMTY) via liquidity mining

SMTY (Smoothy.finance)
Value capture: SMTY is the governance token of Smoothy.finance
  • To coordinate decentralized governance
  • Incentive of the bootstrapping of asset liquidity
  • The initial swap fee is set as 0.04%*, where 0.03%* will be
    distributed to LP and 0.01%* will be converted to SMTY and then
    burned
  • 5% of the interest earned will be converted to SMTY and then
    burned
*The number can be changed by governance

Roadmap

Q2 2020
  • Research
  • Experiment code
  • White paper

Q3 2020
  • Documentation
  • Product test and Demo
  • V1 product launch including: swap/mint/redeem/save/farm and governance module

Q4/Q1 2020
  • V2 product launch with advanced governance module
  • Pricing function with better slippage

Q2/Q3 2021
  • V3 Product launch with lending

Token distribution
  • There is no private sale. The only ways to get SMTY token either by joining the test round through
    application or providing liquidity in Genesis round after Smoothy is launched
  • For test round application: send email to contact@smoothy.finance with brief introduction and what you
    can offer for the community
  • For the emission rate of SMTY, we develop a pseudo-total-supply emission algorithm as the middle
    ground of constant emission (infinite supply) and fixed-time reduction emission (fixed supply). This means that SMTY will have much less inflation than that of constant emission, while the emission is long enough
    to attract LP to stay in Smoothy in the long term

Twitter: @smoothswap
Telegram: @Smoothy_finance
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Davian144
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October 13, 2020, 12:45:01 PM
 #2

This single pool liquidity protocol looks amazing, and I am going to learn more about this protocol now. One of my dear friends, James River Capital, also knows about this protocol, so I'll ask him some questions, as well.
It's amazing, and when you have studied this protocol completely, don't forget to share it here because I'm sure there are still many people who haven't studied this one protocol in depth or completely.

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October 13, 2020, 04:48:47 PM
 #3

Wow. This protocol promise great value Propositions.
Is your post a white paper of Smoothy. Finance? It looks detailed.

Here is my question. Does Smoothy. Finance protocol has materials to study and an API?

Also, how can one benefit from the products you analyzed above and what are the T&C?

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October 13, 2020, 06:13:23 PM
 #4

Not bad 'on paper'. Solving a few well-known issues.

When will we see some MVP? I may have the interest to put some liquidity funds @ Genesis round.

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