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1/ 🍝 In an open marketplace, in which IP is free and anyone can copypasta code and spin up a fork of a successful dApp.
Staying ahead of the real Zero-to-One innovations in #DeFi can be the difference between making it and not
A 🧵 on the first of these game changers Im eyeing
Staying ahead of the real Zero-to-One innovations in #DeFi can be the difference between making it and not
A 🧵 on the first of these game changers Im eyeing
2/📊 Keeping track of every project, let alone identifying key innovations and opportunities in this crowded space can often feel overwhelming.
Luckily for you, I’ve dug through a tonne of VC portfolios, seed round announcements and twitter threads to deliver u the alpha 4 free!
Luckily for you, I’ve dug through a tonne of VC portfolios, seed round announcements and twitter threads to deliver u the alpha 4 free!
3/♾️ @InfPools aka InfinityPools is a real zero-to-one project
that allows for the trading of any on-chain asset with almost unlimited leverage, no liquidations, no counterparty risk and no oracles
I know what ur thinking - sounds too good to be true, right?
Let’s find out
that allows for the trading of any on-chain asset with almost unlimited leverage, no liquidations, no counterparty risk and no oracles
I know what ur thinking - sounds too good to be true, right?
Let’s find out
4/🪡 Quick overview of what this thread will cover:
1️⃣ Project origins
2️⃣ What is it?
3️⃣ How does it work?
4️⃣ Key features
Let’s take a deeper look…
1️⃣ Project origins
2️⃣ What is it?
3️⃣ How does it work?
4️⃣ Key features
Let’s take a deeper look…
5/🔬 I initially found out about InfinityPools courtesy of @delitzer and @nascentxyz,
who had the projects founder @MLGavaudan on a Twitter space back in February.
Matthieu had previously founded lemma.finance, which was the first protocol to create…
who had the projects founder @MLGavaudan on a Twitter space back in February.
Matthieu had previously founded lemma.finance, which was the first protocol to create…
6/💴 stablecoins backed by delta neutral perps.
As a result, Matthieu and the team were intimately aware of the failings of decentralised perp trading.
They’d seen the real value shift that UniSwap had delivered and wanted to create their own 100x improvement for #perpetuals.
As a result, Matthieu and the team were intimately aware of the failings of decentralised perp trading.
They’d seen the real value shift that UniSwap had delivered and wanted to create their own 100x improvement for #perpetuals.
7/📈 They believed #DeFi derivatives could also create a seismic market shift, much like DEXs had done to CEXs.
Despite picking up steam with the likes of @dYdX and @GMX_IO,
they hadn’t seen the 10x improvements on their centralised alternatives yet.
Despite picking up steam with the likes of @dYdX and @GMX_IO,
they hadn’t seen the 10x improvements on their centralised alternatives yet.
8/🫠 Why?
Because decentralised perps didn’t allow for the listing of long-tail assets in an easier, faster & more accessible manner than the incumbents.
Oracle exploitation and counterparty risk made this too risky,
So any real adaptation to the on-chain environment stagnated
Because decentralised perps didn’t allow for the listing of long-tail assets in an easier, faster & more accessible manner than the incumbents.
Oracle exploitation and counterparty risk made this too risky,
So any real adaptation to the on-chain environment stagnated
9/🦾 Meaning DeFi perps ended up just another copy pasta on-chain…
InfinityPools, however, is not.
It’s the outcome of the team leveraging their deep knowledge of margin trading in an attempt to go beyond these limitations.
How? By removing liquidations entirely
InfinityPools, however, is not.
It’s the outcome of the team leveraging their deep knowledge of margin trading in an attempt to go beyond these limitations.
How? By removing liquidations entirely
10/🐞 The team had identified liquidation risk as the #1 bug of perps.
Perpetual protocols, like their centralised counterparts,
Must mitigate the risks of accruing bad credit, either through oracle exploitation or if/when traders positions aren’t closed quick enough.
Perpetual protocols, like their centralised counterparts,
Must mitigate the risks of accruing bad credit, either through oracle exploitation or if/when traders positions aren’t closed quick enough.
11/🪤 Which all on-chain perps have done by charging hefty liquidation penalties,
limiting #leverage available to traders,
As well as the assets that can be traded (usually to top 5-10 by market cap).
A far cry from the original promise of DeFi #derivatives…
limiting #leverage available to traders,
As well as the assets that can be traded (usually to top 5-10 by market cap).
A far cry from the original promise of DeFi #derivatives…
12/🧪 So how does InfinityPools get around that?
InfinityPools allows anyone to offer up margin by depositing their Uni V3 liquidity position onto the protocol in return for a steady yield.
After which, traders can borrow the spot within those positions by posting collateral.
InfinityPools allows anyone to offer up margin by depositing their Uni V3 liquidity position onto the protocol in return for a steady yield.
After which, traders can borrow the spot within those positions by posting collateral.
13/🌀 So rather than borrowing spot from the exchange to long/short an asset
Traders are securing the spot liquidity needed to unwind their position via the borrowed LP position.
Meaning losing positions are settled in an automated, instantaneous and slippage free manner.
Traders are securing the spot liquidity needed to unwind their position via the borrowed LP position.
Meaning losing positions are settled in an automated, instantaneous and slippage free manner.
14/💹 Liquidity providers do so in return for what @MLGavaudan argues will be some of the most competitive yield in the space
Far surpassing offsetting impermanent loss,
InfinityPools will produce yields above implied vol due to the volatility arbitrage provided by the traders
Far surpassing offsetting impermanent loss,
InfinityPools will produce yields above implied vol due to the volatility arbitrage provided by the traders
15/🔄 So lenders get amazing yield with zero credit risk (because exit liquidity is secured via the LP position).
InfinityPools is not a perp or DOV, but something entirely new: A leverage swap DEX.
But how exactly do traders get leverage?
InfinityPools is not a perp or DOV, but something entirely new: A leverage swap DEX.
But how exactly do traders get leverage?
16/🚀 Imagine you're a trader looking to long ETH with leverage
Using an ETH/USDC pool and imagining that the current price of ETH = 1000 USDC.
Imagine the LP adds 1000 USDC worth of liquidity in a tight range around 900 USDC
Using an ETH/USDC pool and imagining that the current price of ETH = 1000 USDC.
Imagine the LP adds 1000 USDC worth of liquidity in a tight range around 900 USDC
17/🔌 You, the trader, borrow that LP token and redeem it for 1000 USDC.
You then swap this 1000 USDC for 1 ETH (minus fees & slippage) using your favorite DEX.
From here there are three ways this play could play out for you:
You then swap this 1000 USDC for 1 ETH (minus fees & slippage) using your favorite DEX.
From here there are three ways this play could play out for you:
18/ 🎢
1️⃣ ETH price 🌖: You make money! You can swap back part of the 1 ETH for 1000 USDC to repay the LP token
2️⃣ ETH price ⬇️ to just above 900 USDC: You need 100 USDC (~0.11 ETH) as minimal collateral to repay the full LP token
3️⃣ ETH price ⬇️ below 900 USDC: The LP expects
1️⃣ ETH price 🌖: You make money! You can swap back part of the 1 ETH for 1000 USDC to repay the LP token
2️⃣ ETH price ⬇️ to just above 900 USDC: You need 100 USDC (~0.11 ETH) as minimal collateral to repay the full LP token
3️⃣ ETH price ⬇️ below 900 USDC: The LP expects
19/🔋 …an LP token worth 1.11 ETH...
With 1 ETH already held, you need 100 USDC or 0.11 ETH as collateral to repay the LP token. #CoveringLosses
💡 The minimum collateral needed for borrowing a 1000 USDC LP token with a 900 USDC liquidity range is ~100 USDC (~10x leverage).
With 1 ETH already held, you need 100 USDC or 0.11 ETH as collateral to repay the LP token. #CoveringLosses
💡 The minimum collateral needed for borrowing a 1000 USDC LP token with a 900 USDC liquidity range is ~100 USDC (~10x leverage).
20/💦
The closer the liquidity range to the current ETH price, the more leverage it enables!
⚖️ For example, if the borrowed liquidity range was at 999 USDC, the max loss/initial collateral needed would be 1 USDC, giving you 1000x leverage 🔥
The closer the liquidity range to the current ETH price, the more leverage it enables!
⚖️ For example, if the borrowed liquidity range was at 999 USDC, the max loss/initial collateral needed would be 1 USDC, giving you 1000x leverage 🔥
21/💫 Now there are a few key features that make this a real 0-to-1 shift.
1) LPs get yield even when outside of range, as traders pay an ongoing "funding rate" to LPs for borrowing their LP tokens
Allowing for traders to keep their positions open, no matter the asset price 🤯
1) LPs get yield even when outside of range, as traders pay an ongoing "funding rate" to LPs for borrowing their LP tokens
Allowing for traders to keep their positions open, no matter the asset price 🤯
22/🤝
2) Anyone can list any asset pairing of their choosing, regardless of how long tail the assets are.
Allowing traders to long/short almost any token with high leverage in a #permissionless manner,
As long as someone is willing to LP them… 😱
2) Anyone can list any asset pairing of their choosing, regardless of how long tail the assets are.
Allowing traders to long/short almost any token with high leverage in a #permissionless manner,
As long as someone is willing to LP them… 😱
23/☠️
3) Leverage can be theoretically unlimited, constant and based on any mix of LP tokens ,to create the leverage on the assets you want.
At current the team are projecting ~1000-2000x leverage will be possible for blue chips.
But up to 10,000x leverage for stable pairs…
3) Leverage can be theoretically unlimited, constant and based on any mix of LP tokens ,to create the leverage on the assets you want.
At current the team are projecting ~1000-2000x leverage will be possible for blue chips.
But up to 10,000x leverage for stable pairs…
24/⚡️ They’re also planning on rolling out a load more chad features,
Such as interest rate tolerance for traders and a omething they’re labelling ‘Everlasting structured products’ 👀
Honestly wrapping my own head around how InfinityPools works has been a whirlwind.
Such as interest rate tolerance for traders and a omething they’re labelling ‘Everlasting structured products’ 👀
Honestly wrapping my own head around how InfinityPools works has been a whirlwind.
25/💙 If you’ve got this far I applaud you!
Despite this thread being much longer than anticipated, I hope you agree that it was a worthwhile venture.
Please do me the honour of liking, retweeting or following if you enjoyed and would like to see more from me 😉
Despite this thread being much longer than anticipated, I hope you agree that it was a worthwhile venture.
Please do me the honour of liking, retweeting or following if you enjoyed and would like to see more from me 😉
Some brothers in arms added for the clout:
@defi_gaz
@0xSisyphus
@2lambro
@rektdiomedes
@Defi_Maestro
@chilla_ct
@thelearningpill
@Route2FI
@schizoxbt
@0xSalazar
@rektfencer
@defi_mochi
@LouisCooper_
@naniXBT
@0xsurferboy
@RektProof
@milesdeutscher
@0xTindorr
@ganymede_0x
@Pool2Paulie
@lBattleRhino
@0xSisyphus
@2lambro
@rektdiomedes
@Defi_Maestro
@chilla_ct
@thelearningpill
@Route2FI
@schizoxbt
@0xSalazar
@rektfencer
@defi_mochi
@LouisCooper_
@naniXBT
@0xsurferboy
@RektProof
@milesdeutscher
@0xTindorr
@ganymede_0x
@Pool2Paulie
@lBattleRhino
@WinterSoldierxz
@thedefiedge
@tztokchad
@joey_debruin
@phtevenstrong
@WartuII
@tumilett
@0xTheGreatApe
@BowTiedNightOwl
@BowTiedIguana
@BackTheBunny
@thedailydegenhq
@thedefiedge
@tztokchad
@joey_debruin
@phtevenstrong
@WartuII
@tumilett
@0xTheGreatApe
@BowTiedNightOwl
@BowTiedIguana
@BackTheBunny
@thedailydegenhq
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