SpiritSwap partners with Olympus DAO for protocol owned liquidity
A new approach to securing protocol owned liquidity with Olympus Pro
As the DeFi space pivots, changes and expands, the opportunity to improve capital efficiency and liquidity management also manifests.
It’s important for an AMM such as SpiritSwap to stay ahead of the curve. Concentrated liquidity and Protocol/DAO owned liquidity has been a problem SpiritSwap has been looking to solve for some time now.
Farming is a great way for a protocol such as SpiritSwap to bootstrap initial liquidity at the beginning, however it’s difficult to ignore that this capital is ultimately “mercenary capital”. What does this mean? It means this capital can be withdrawn at any time. In essence, SpiritSwap is currently “renting” capital/liquidity from its community in return for farming emissions.
Securing deep liquidity is advantageous for an AMM such as SpiritSwap as it allows for liquidity concentration, less slippage and more reliability across the exchange. This is where Olympus Pro comes into the equation. By implementing Olympus Pro’s “bond” model, SpiritSwap and our eventual DAO, will now be able to take ownership of this liquidity, effectively locking it away in the exchange forever.
What Is Olympus Pro?
As stated by OlympusDAO — Olympus Pro is a service for protocols looking to supplement liquidity mining in their emissions programs with low overhead and maximum impact.
Via the bonding service model offered by Olympus Pro, SpiritSwap can now accumulate the crucial liquidity that we generally attain through liquidity mining. Moving forward, rather than “renting” that liquidity, the SpiritSwap protocol will offer to purchase it permanently from its users. You can think of this as “protocol owned liquidity”.
Our standard liquidity farming model will continue to operate, however by implementing the Olympus Pro model we will be able to offer our community more choice as to how they participate in SpiritSwap’s liquidity provisions.
As a user you can now:
1. Stake Liquidity tokens in order to farm SPIRIT (as per our standard AMM liquidity mining model).
2. Effectively sell their liquidity tokens to the SpiritSwap protocol in return for SPIRIT at a discounted rate.
An example of how the bond model will work:
1) Tony has $1000 worth of SPIRIT/FTM tokens.
2) He sells that liquidity to the SpiritSwap DAO via Olympus Pro Bonds to earn SPIRIT tokens at a discounted rate and earns $1100 worth of SPIRIT tokens.
3) Via liquidity farming Tony would usually stake SPIRIT-FTM LP tokens to earn SPIRIT tokens. At 100% APR, it would take 1.2 months to earn $100 worth of SPIRIT tokens. However by engaging in Olympus Pro, the sale of Tony’s $1000 worth of liquidity has meant that after the 7day bonding period is over he has received $1100 SPIRIT tokens within 7days.
* This is just an example, actual numbers will be variable based on market conditions
The SPIRIT tokens allocated to Olympus Pro Bonds will be coming from the SpiritSwap DAO fund. Farming rewards will not be diluted and the SpiritSwap DAO can begin accumulating its own liquidity.
There are many strategies that can evolve out of this new model, and we are very excited to open these options up for the community to enjoy.
To conclude, the SpiritSwap team would like to thank Olympus DAO for offering us this amazing opportunity to integrate, adapt and evolve in a manner that offers our community more choices and our AMM to obtain a higher density of protocol owned liquidity. Here’s to DeFi 2.0!
Olympus DAO Resources
- OlympusDAO — Medium
- Introducing Olympus V2. Olympus has been live for almost seven… | by OlympusDAO | Oct, 2021 | Medium
Follow SpiritSwap on Medium and other channels below to keep up to date with the latest news!