Smoothy.finance - A novel single pool liquidity protocol

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