Articles about #DEFI

All you need to know about Ve(3,3) projects

21/10/2023

Home | News & Insights All you need to know about Ve(3,3) projects The presence of deep liquidity in a pool is a crucial requirement for ensuring trading volume and stable prices of a particular token. Every project that launches its own token faces the challenge of attracting liquidity to these pools, in addition to attracting liquidity to its own product. However, the emergence of ve(3,3) protocols in the DeFi space helps solve this problem and offers a new perspective on the relationship between liquidity providers and decentralized exchanges (DEX). Let’s take a closer look at the ve(3,3) concept. First and foremost, it’s worth mentioning Andre Cronje and Daniele Sestagalli – two of the most famous builders in crypto. Among their notable projects, one of them is Solidly – a decentralized exchange with the ve(3,3) tokenomics concept. Solidly gained attention when Andre Cronje published a brief article on Medium in January 2022, explaining the tokenomics concept of the new project and naming it ve(3,3). The Origins of ve(3,3) The name ve(3,3) stems from the combination of two tokenomics designs. The first design, ve (Vote Escrow), enables token holders to participate in the governance of a project by locking their tokens for a specific period. This design was first implemented in the Curve DAO project. However, one of the challenges of this design was locked liquidity. Users who acquire voting power by locking their tokens are unable to sell or transfer them until the lock-up period expires. The second design, (3,3), is derived from the concept of “Nash Equilibrium” in the Olympus DAO project. It attempted to set up a tokenomics framework where staking was the most profitable behavior for token holders, while selling tokens was the least profitable. Andre Cronje decided to incorporate a similar equilibrium into the Solidly project, but with more refined incentives. Thus, ve(3,3) © In his Solidly project announcement on Medium (ve(3,3), Andre Cronje outlined the following principles of this design: ve(3,3) Actors The ve(3,3) tokenomics in a decentralized exchange (DEX) involves four key types of participants: ve-token holders, liquidity providers, protocols, and traders. Let’s explore the roles of each of these participants in the overall ecosystem: Is ve(3,3) Concept Thriving? The general principle of ve(3,3) revolves around each participant having their own interests and incentives for mutually beneficial participation. For liquidity providers, it is also attractive that everything happens transparently, and at the end of each epoch, they can know in advance which pool will bring more profitability. By following the voting process, they can secure higher returns compared to the average market. Currently, there are numerous Solidly forks and projects that utilize the ve(3,3) design, each introducing their own additions. Some of these projects, such as Velodrome and Thena, have shown excellent results. Each project makes minor changes to the ve(3,3) concept, such as shifting from dynamic to linear emissions or introducing other modifications to timing and reward structures. For liquidity providers, this allows them to make informed decisions based on reward structures and potential profitability. If you’re interested, you can explore Solidly forks on the DefiLlama website (DefiLlama). If you have any questions, feel free to ask. We’re happy to engage in further discussion! What should you do next? Share: Twitter Facebook Telegram

Memcoins aren’t bros?

21/10/2023

Home | News & Insights Memcoins aren’t bros? Over the past few weeks, we have seen a new wave of memecoins flooding the market. Trading volumes on these meme pools are skyrocketing, APRs are hitting the roof, and CT is full of $PEPE stories and life-changing cases. But how does this affect our DeFi market? Our view is simple — memecoins aren’t bros. Here’s why… 1. Meme coins and liquidity. The DeFi market is still relatively small and faces problems related to low liquidity. When the hype around meme coins grows, liquidity begins to shift from “solid” projects to these meme coins. This can result in profit-taking in altcoins, decreased trading volumes, reduced profitability for liquidity providers, and even the appearance of impermanent losses larger than expected. 2. Lack of value. This is a fundamental problem with meme coins. By sucking up liquidity, meme coins do not create any value for the industry. They do not generate new projects, technologies, development teams, or expertise. Meme coins simply create memes, hype and fomo. 3. FOMO growth. The meme coin hype creates excellent conditions for new scams to emerge. Numerous honeypots, phishing scams, and social media spam start to appear. In addition, there are numerous negative cases emerging, which worsen the overall perception of the crypto among people. 4. Meme coins are a zero-sum game in which liquidity flows from small retail investors to large ones, creating potential for further manipulation. In conclusion, we believe that meme coins are not a suitable investment for DeFi. Although they may seem fun and exciting, investing in them can lead to significant losses and hinder the development of more meaningful projects in the industry. Share: Twitter Facebook Telegram

How to calculate true APR/APY?

21/10/2023

Home | News & Insights How to calculate true APR/APY? Today we’re gonna talk about two important metrics – APR and APY. We’ll go over what they are, how and when to calculate them, and most importantly, how to use them to make smart farming decisions. Because let’s face it, when it comes to farming, it’s all about those “percentages”! Table of Content: Base. What is APR and APY? APR and APY are widely used in DeFi to help us understand the potential return we can earn by providing liquidity. Both metrics represent annual interest rates and are essentially forward-looking metrics. They are useful for predicting the potential returns we can earn from various investments. Here’s what each of them means: APR (Annual Percentage Rate) is the annual interest rate that is applied to the invested assets. APY (Annual Percentage Yield) is the annual interest rate that is applied to the invested assets, taking into account compound interest and other factors that affect the overall return. Calculating APR (Annual Percentage Rate) This is a basic metric for evaluating the profitability of a liquidity pool/asset/strategy. The main feature when calculating APR in DeFi is the strong fluctuations in parameters that affect profitability (TVL, volumes, fees, rewards per block, etc.). Therefore, sometimes to understand the “fairness” of APR, we need to look at the dynamics of these parameters. Calculating APY (Annual Percentage Yield) APY can be thought of as APR with a compounding function. This metric shows us the annual return taking into account reinvestment of the earned interest. It can be calculated differently from project to project. However, if you know your APR, you can easily calculate your APY. In summary, the difference can be presented as follows: What you need to understand about APR and APY: 1. APR and APY are calculated based on historical averaged data. In such a volatile market like crypto, extreme values can lead to statistical errors. In just one day, we can see pool volumes increase by hundreds or thousands of times, while the next day everything returns to previous values. Take a look at the screenshot of such a vault. 2. APR/APY are manipulative metrics in DeFi, with no standard for their calculation. Protocols are naturally interested in showing a high percentage. What tricks could be used in their calculation? 3. APR and APY are measures of profitability that do not take into account changes in the value of the underlying asset. Therefore, it is easy to see high APRs but suffer losses from a decrease in the value of LP tokens/tokens. But despite the fact that APR/APY have their peculiarities in DeFi and can significantly overestimate expectations, they still give us an understanding of the product’s profitability. Calculating the “true” APR/APY In reality, there is no “true” APR and APY. Any approach to calculating these metrics will be a simulation of future profitability. However, by delving into the model of generating profitability for a particular pool, you can choose a suitable approach to calculate these metrics – and this will be the most “true” APR/APY for you, as it will take into account your specific strategy parameters. Calculator APR/APY We have created a simple calculator for you in the form of a Google Sheet, which will help you calculate what income you can expect from different pools with various parameters. In it, you can also calculate the result with top-ups.Just make a copy of the table and use it👇 Leechprotocol | Calculator APR/APY What should you do next? Share: Twitter Facebook Telegram

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