Thread by @leslamb0

📢#DeFi Defined Series Ep 4 ft. Nicola Santoni @Realsantos1905 from @Lemniscap

🟠 The evolution of AMMs
🟠 CFMMs and new iterations
🟠 On-chain options protocols
🟠 Categories of DeFi token designs: Derivatives, Lending/Borrowing, AMMs, Cross-chain

🎙️link.chtbl.com/B_QHBkPh

🎬Lemniscap's Top 5 Insights 🎬

🚨**BONUS EPISODE** on "Volatility Pools: The Anatomy of a New DeFi Primitive" dropping tomorrow!

1/ @Realsantos1905 from @Lemniscap joins #CUP to unstack 1) Uniswap to Mooniswap: the evolution of Automated Market Making designs; 2) DeFi options trading; 3) Categories of DeFi token designs

2/ AMMs:
- Provide constant liquidity
- Provide transparent and deterministic pricing
- Democratize liquidity provision

Though AMMs aren’t new per se, we’ve seen new primitives emerge to suit the needs of DeFi trading.

3/ There are many flavors of AMMs in DeFi 🔥
- Constant function MM OG @UniswapProtocol
- Constant mean MM @balancer
- Hybrid CFMM @Bancor (V2)

We're also seeing interesting next-gen iterations such as @mooniswap

4/ Drawbacks of CFMMs? Slippage & impermanent loss

“Slippage is a natural tendency of prices to move against the direction of buyer & sellers. This happens as the trader absorbs liquidity from the pool...which means that the larger the trade, the greater the slippage!”

5/ ... “on the other side, there’s impermanent loss for liquidity providers(LPs) which occurs whenever the relative external market price of an asset diverges from the price at which you provided liquidity”

Tune in to hear how @Bancor @mooniswap are aiming to solve these issues!

6/ Bancor V2 is a new iteration of the hybrid CFMM

“The existing protocols have been used mostly for very low volatile assets like stablecoins or wrappers or synthetic underlyings. Bancor wants to apply this model to volatile assets, which is fairly revolutionary”

7/ V2 offers
- liquidity amplification
- single-reserve pool tokens
- dynamic weights using an external oracle @chainlink

How does Bancor turn latent capital-> hyper productive capital w/o removing key incentives required for arbitrageurs to participate in the ecosystem?

8/ Lots of experimentation going on w/ DeFi Options too. @opyn_ (first mover) & @HegicOptions (led by an anon. team/founder). Both are novel but have limitations:

- Liquidity providers face impermanent loss w/ risk of time decay
- Front running
- Collateral (in)efficiency 🔽

9/ @opyn_ V2 may include call and put spreads to "give exposure to a range of prices and consequentially also imply a little lower collateralization.”

@HegicOptions might make the collateralization ratio flexible so you could "choose the collat. ratio before buying an option"

10/
🚨 Tune in to our bonus episode on volatility pools dropping on 8/19!

👉Listen to the full episode: link.chtbl.com/B_QHBkPh
👉Also on Anchor: anchor.fm/cryptounstacked

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