The core concept of SIL is the same as the initial iteration of yswap. The core difference here is that the asset is not pegged to the U.S. dollar, but has a lower U.S. dollar binding. Therefore, the representative value can be higher than the dollar value, but not lower.
January 12,Yearn.finance (YFI) founder Andre Cronje deployed yesterday SushiSwapThe V2 IL Protection (SLP) contract explained that the core concepts of SushiSwapV2’s impermanent loss protection and unilateral LP mechanism are similar to the original iterative version of yswap, that is, deposit assets and introduce the value of the assets into the system. The core difference here is It is that the asset is not tied to the US dollar, but has a lower US dollar binding. Therefore, the representative value can be higher than the dollar value, but not lower. In addition, every transaction between the impermanent loss protection and the unilateral LP pool will incur a 0.2% fee, which is used to automatically purchase wYFI from the market.
Unilateral exposure to ease the loss of impermanence. This is my original intention to develop yswap. At the time, my idea was simple: to introduce a transfer token representing the dollar value of the asset to be deposited.
For example, if you deposit 1 ETH, the agreement will mint 1000 USD and provide it to AMM. In practice, this seems simple, but it leads to many potential problems and economic loopholes.
In the following 7 months, after about 14 revisions, from yswap to Stable Credit, there is now Single sided exposure and Impermanent Loss (SIL).
The core concept of SIL is the same as the initial iteration of yswap, that is, deposit assets and introduce a representative value of the assets into the system. The core difference here is that the asset is not tied to the U.S. dollar, but has a lower U.S. dollar binding. Therefore, the representative value can be higher than the dollar value, but not lower.
Although impermanent losses still exist during periods of market turmoil (and withdrawals and deposits should be avoided when the transaction ratio and the oracle ratio are unbalanced), the introduction of an interest-free system of loans can greatly reduce impermanent losses.
There is no need to cast a representative asset value, but to create an interest-free debt equal to the value at the time of deposit. The debt is paid off when the user withdraws money. (This inspiration comes from Alpha Homora)
Finally, every transaction between the unilateral and the IL protected pool will incur a 0.2% fee. These fees will automatically purchase wYFI from the market. (About wYFI, more content: New DeFi gameplay丨YFI will be split 1,000 times, or transformed into a stable currency protocol)
Although we are very happy and excited about the early results of SIL, a lot of further review is still needed, so we will no longer provide public UI in the near future, and leave the interaction to be able to identify and interact with SIL contracts by ourselves Advanced users.
According to a report on January 11, Year's contract deployment address (0x2D407d...47d45C) on the chain aggregator deployed a brand new token contract. The full name of the token is SushiSwapV2 IL Protection (abbreviated as SIL). The solution was developed by Andre Cronje and will be integrated into SushiSwap and will help differentiate it from other AMM protocols. The official said that the program is in testing, and any release is experimental.