Smoothy is a novel solution for swapping assets that are effectiverly backed by the same underlying assets (e.g., stablecoins) with a single pool, comprising a set of interoperable protocol smart contracts deployed on the Ethereum-compatible blockchains, and offers:
- Simple and smooth swap
- Extremely low gas fee
- Flexibility to add/remove any tokens that backed by the same asset into the pool
- Better liquidity/lower slippage
- Better LP token incentives
Introduction
Due to the explosive growth of DeFi, multiple assets were introduced into the Ethereum network as anchor coins, such as BTC, USD, and GOLD. At present, there are more than 20 asset-backed tokens in the current market, multiple among which are backed by the same assets. In the future, more tokens that are effectively backed by the same underlying assets are expected to be introduced into the network. Theoretically, the swap ratio between these tokens should be 1:1 given that they are effectively backed by the same underlying assets. However, for the current DEX in the market, this fundamental point was not fully considered when designing the exchange protocol, thereby causing unnecessary high costs for users because of the slippage. Thus, a better-designed product that specializes in the assets that are effectively backed by the same underlying assets is urgently needed in the market.
Curve.fi and mStable are the two representative products that are dedicated to swapping tokens effectively backed by the same underlying assets (such as stablecoins). Curve.fi uses StableSwap protocol utilizing an invariant as a combination of constant-product (Uniswap) and constant-sum invariants. It achieves great success by providing low-slippage swap compared to Uniswap. However, due to the mathematical complication of StableSwap curves, a pool in curve.fi supports only up to 4 assets - meaning that to support more assets, it has to open more pools (10+ pools) with some assets spreading over multiple pools (such as DAI, USDC). The disperse of the asset in multiple pools greatly reduces liquidity and thus increases slippage.
mStable offers a single pool solution and offers 1:1 swap as long as the percentages of the tokens are below the predefined weights. However, it lacks flexibility, where a swap is prohibited a percentage of token exceeds a predefined weight. Further, it incurs a high cost for swapping mainly because of the high gas fee by withdrawing/depositing tokens in the underlying interest-earning protocols (Compound/AAVE).
Smoothy has been developed from scratch to address the issues of existing protocols. Smoothy's goal is to offer one pool to swap all tokens with
- Simple and smooth swap
- Extremely low gas fee
- Flexibility to add/remove any stablecoins
- Better liquidity/lower slippage and better LP token incentives
SMTY Token Functionality
The native digital cryptographically-secured utility token of Smoothy (SMTY) is a transferable representation of attributed functions specified in the protocol/code of Smoothy, and which is designed to be used solely as an interoperable utility token on the network.
SMTY is a non-refundable functional utility token which will be used as the economic incentives which will be distributed to encourage users to contribute and maintain the ecosystem on Smoothy, thereby creating a win-win system where every participant is fairly compensated for its efforts. SMTY is an integral and indispensable part of Smoothy, because without SMTY, there would be no incentive for users to expend resources to participate in activities or provide services for the benefit of the entire ecosystem on Smoothy. Given that additional SMTY will be awarded to a user based only on its actual usage, activity and contribution on Smoothy, users of Smoothy and/or holders of SMTY which did not actively participate will not receive any SMTY incentives.
To develop a self-sustainable, closed-loop economy, all the fees (e.g. trading fees, interest fees, penalty fees) collected by the network would be re-distributed as incentives for active contributors within the ecosystem.
SMTY does not in any way represent any shareholding, participation, right, title, or interest in the Company, the Distributor, their respective affiliates, or any other company, enterprise or undertaking, nor will SMTY entitle token holders to any promise of fees, dividends, revenue, profits or investment returns, and are not intended to constitute securities in Singapore or any relevant jurisdiction. SMTY may only be utilised on Smoothy, and ownership of SMTY carries no rights, express or implied, other than the right to use SMTY as a means to enable usage of and interaction within Smoothy.
For Smoothy to function properly, users would need to be incentivised to play the role of liquidity providers and stake their digital assets into the market-making pools. As compensation for opportunity costs as well as impermanent losses, these liquidity providers which help to promote adoption of Smoothy by staking or including assets to liquidity pools in exchange for LP tokens would be rewarded with SMTY tokens (i.e. liquidity "mining" on Smoothy), according to each user's relative contribution.
It is anticipated that the community of SMTY holders would comprise a diverse field of developers, professionals and supporters of the project to develop Smoothy (including without limitation experts in software development, blockchain technology, cryptography, artificial intelligence, law or finance), which will be able to share and exchange balanced views on the overall direction of the project. In order to promote community governance for the network, SMTY would allow holders to propose and vote on governance proposals to determine features and/or parameters of Smoothy as well as protocol improvements, with voting weight calculated in proportion to their token holdings.
