Octan Finance - renovate AMM with high capital efficiency & tailor market making #109
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Abstract
Octan innovates a novel AMM model with customizable capital efficiency & tailored market making, while keeping simple UX, fungibility & reusability of LP tokens of Uniswap v2. This is done by our invention of a novel price discovery mechanism, namely, Elastic Parameterized Limit Order Book (PLOB), inspired by LOB in traditional finance.
Proposal Information
Description
Fundamental problems
Solution (a novel AMM - Elastic PLOB): transform MM to asset allocation
We invent a novel price discovery mechanism, namely, Elastic PLOB to tailor CE & market making, while keeping simple UX, fungibility & reusability of LP tokens of Uniswap v2. PLOB stands for Parameterized Limit Order-Book, which inspires Octan model.
Octan proposes a novel AMM model, where LPs allocate their liquidity into the pool according to a bonding curve that mimics the general shape of a traditional limit orderbook (LOB). We introduce a novel concept, Elastic Factor, to allow the liquidity concentration of the AMM to be automatically adjusted according to the relative trading size. This elasticity ensures unbounded liquidity, thus the pool never runs out of liquidity regardless of the trading size. Our general Elastic model covers the special case of the constant-product market making model x*y=K. More importantly, it opens a new door to create arbitrary AMM with customized local orderbook shape around the market price as well as tailored liquidity concentration.
The major contribution of this model is that, when the AMM is locally V-shaped, both impermanent loss (IL) and loss-versus-rebalancing (LVR) in this model asymptotically vanish when the trading frequency is high or, equivalently when the pool size is large. Therefore, the pool size will behave exactly like a rebalancing portfolio in the geometric Brownian motion model.
Some other novelties of the model are as follows.
Note: loss-versus-rebalancing (LVR) is an important problem among among Nakamoto challenges proposed by A16Z. Octan Elastic model is a response to the problem.
Flamingo Finance is the leading decentralized exchange on NEO. Flamingo strictly follows the well-established AMM models (invented by Uniswap, Curve), which is lack of flexibility and customization, hence possibly not really suitable for the blockchain ecosystems with low liquidity. Octan Finance fills up that gap for NEO ecosystem.
Octan Finance: market proposition & USP comparison
Motivation
Goals
Octan Finance targets to implement a prototype of spot AMM protocol on NEO-EVM testnet, based on Elastic PLOB model. Ultimately, Octan aims to release full production on NEO mainnet and then becomes Top2 DEX (both spot & perp AMM) on NEO Ecosystem.
Octan AMM fits the demands of many customers, and makes them beneficial:
Deliverables & Roadmap
Specify deliverables in detail, including the following info for each:
90 days6$30,000 USD ~ 2,142 NEO at price $14 USD/NEOThere are three milestones corresponding with 30-day deliverables.
$10,000 USD ~ 714 NEO at price $14 USD/NEO):$10,000 USD ~ 714 NEO at price $14 USD/NEO):$10,000 USD ~ 714 NEO at price $14 USD/NEO):Deliverables Verifiability
Community can verify Octan promised deliverables via our published materials.
Budget Plan
The requested budget ($30k) is used for RnD, designs and AMM implementation (18 man months in equivalence) and frontend hosting:
About You / Your Organization
Octan FinanceNAhttps://github.com/Octan-Labs/New-AMMShort-Bio
The core team of Octan Finance has 5 full-time people, based in Vietnam. We are all OG in crypto space with 5 years of rich experiences in developing blockchain infra and applications.
Core team members (6):
Portfolio of Projects / Past Experience
Our developed and released Web3 products:
Proposal Info 📋
Proposal Type:
request-for-fundingAmount Requested:
2142Token:
0xef4073a0f2b305a38ec4050e4d3d28bc40ea63f5(NEO)Receiver Address:
NVrL5Drg31rjy2EwoTXEShAV8sCxcyyPFR(0xd0c0e7e5604379f43b03175bcabbe5eda507016d)Created by: @paven86 🚀
Raw Intents: 👀
[ { "target_contract" : "0x6276c1e3a68280bc6c9c00df755fb691be1162ef", "method" : "releaseTokens", "params" : [ { "type" : "Hash160", "value" : "ef4073a0f2b305a38ec4050e4d3d28bc40ea63f5" }, { "type" : "Hash160", "value" : "d0c0e7e5604379f43b03175bcabbe5eda507016d" }, { "type" : "Integer", "value" : "2142" } ], "call_flags" : 15 } ]👇 React with 👍 if you liked it, or 👎 if you think this proposal can be enhanced!
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