Editor's Note: This article comes fromBlock beats BlockBeats (ID: BlockBeats), reprinted by Odaily with authorization.
Editor's Note: This article comes from
Block beats BlockBeats (ID: BlockBeats)
Block beats BlockBeats (ID: BlockBeats)
, reprinted by Odaily with authorization.
The founder of YFI, Andre Cronje, published the article "Encryption Economy, Permanent Liquidity, and Offsetting Impermanence Loss" on Medium, introducing a token model he newly designed. AC hopes to design a liquidity-based At the same time, through liquid governance to offset the impermanent loss of inflationary tokens, to solve some of the current problems of AMM.
The following is the translation of Rhythm BlockBeats:
Inspired by protocols like APML, YAM, UNI and SNX, I started experimenting with some new economic concepts. Finally, I found a liquidity-based inflation token that can offset impermanent losses through liquidity governance
We actually have two basic purposes:
One is to generate as many transaction fees as possible;
The second is to offset impermanent losses as much as possible
Looking at the second purpose, we need to fully incentivize liquidity providers through the standard liquidity incentive mechanism (further improved below).
In terms of providing liquidity to the initial allocation pool (Pool 1) and the auxiliary pool (Pool 2), the design prior to the adoption of such tokens has been fairly standard. The problem with this design is that pool 2 is usually just a place for mining and dumping, pool 1 mints tokens and pool 2 burns them. The end result is not good for liquidity providers.
Whereas my design merges Pool 1 and Pool 2 into the same design structure and creates incentives for traders to arbitrage.
The purpose of this design is not to specifically emphasize the value of tokens, but to focus on the volatility of tokens. Liquidity providers earn income through transactions. The system I designed is for this result.
secondary title
Technical Information
Next, I will break down each concept and explain that I hope this design can lead to further liquidity-based incentive programs.
The core is the increment function. Very simple, the logic is to provide 1% of the total rewards to liquidity providers every 7000 blocks (about 25 hours).
The above design is beneficial to LP providers, and essentially means that everyone will only be LP providers. Therefore, I made a small adjustment, the minted amount only accounts for 50% of the total amount, and the remaining 50% comes from the liquidity pool. 90% of new tokens are given to liquidity providers and 25% to common holders.
In short, if you provide liquidity, you will receive a reward of 0.90% every 25 hours.
Every time the token balance changes, the system keeps track of how much it increases proportionally.
The initial liquidity is a constraint, for this purpose the token itself can be minted from within the contract itself, any liquidity provided for minting is provided automatically. The curve itself is similar to Uniswap's K value curve.
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core contract
