Editors Note: This article comes fromChatting with Xiaozha (ID: xiaonazha88), reprinted by Odaily with authorization.
Editors Note: This article comes from
Chatting with Xiaozha (ID: xiaonazha88)
Chatting with Xiaozha (ID: xiaonazha88)
On the way to the development of DeFi, there are still many problems that need to be solved, such as the impermanent loss of liquidity market making, ETH transaction congestion, high gas fees and so on.
For DEX, solving impermanence loss is something that many project parties are considering.
Bancor has been trying to solve the problem of impermanence loss, and YFI founder AC is also trying to solve the problem of impermanence loss.
How to do it? Lets take a look.
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1. bancor V2.1 eliminates elastic supply
The bancor protocol launched version V2.1, which introduces two important functions for the AMM pool through elastic BNT supply:
1. Unilateral pledge;
2. Provide impermanent loss protection.
How did Bancor V2.1 achieve it?
Bancor uses its protocol token, BNT, as the corresponding asset in each pool. Using an elastic BNT supply, the protocol co-invests in asset pools with liquidity providers and pays the cost of permanent losses through the swap fees earned from their co-investments, as shown in the flowchart below.
Regarding the flexible BNT supply mechanism, my personal level is limited and I dont understand it. Those who are interested can read the full text.
We know that BNT is not a token with elastic supply, so the token model of BNT has also been changed in Bancor v2.1. It is necessary to obtain community approval through Bancor governance in order to continue to upgrade. Voting will begin on October 14 .
Bancors solution to impermanence, if verified, will have a great impact and will attract more funds into the DeFi ecosystem.
Coincidentally, AC, the founder of YFI, is also trying to solve impermanent loss, and elastic supply is also mentioned in the solution model.
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2. AC needs to solve permanent liquidity and offset impermanent loss
YFI founder Andre Cronje published the article Cryptoeconomics, Permanent Liquidity, and Offsetting Imermanent Losses on Medium.
Inspired by protocols such as APML, YAM, UNI, and SNX, AC newly designed a token model: a liquidity-based inflation token that offsets impermanent losses through liquidity governance to solve some of the current AMM problems.
Of course, I still didnt understand it, so Im interested to read the original text.
In ACs article, there is this sentence: Every time the token balance changes, the system will track its proportional increase.
Isnt this the elastic currency concept that AMPL engages in? AMPL automatically adjusts the supply of AMPL every morning at 10:00 Beijing time.
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3. Use flexible supply to solve impermanent losses
Both Bancor V2.1 and AC propose an elastic supply token model to solve the problem of impermanent loss.
If elastic supply solves impermanent loss, it will be a revolution for DEX and affect the dex pattern. It is also a good thing for the current elastic currency ampl. Elastic currency is an innovation in DeFi, which will expand the application scenarios of elastic currency.
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4. DeFi project financing continues
There is also a lot of financing information on DeFi recently.
1. Math Wallet raised USD 7.8 million, led by Alameda Research and Multicoin Capital;
