Over the last year, the high-performance Binance Smart Chain has rapidly overtaken Ethereum as the leading platform for decentralized finance (DeFi) applications. The tremendous innovation in automated market-making that has taken place on Ethereum, as the de facto chain for projects seeking smart contract functionality for many years, is following close behind.
Bunicorn saw no reason to reinvent the wheel but instead chose to improve it. Bunicorn combines the best of several AMM models to create a DEX with liquidity pools that provide high capital efficiency and low slippage. These optimized pools additionally benefit from the high speed and low gas fees of the Binance Smart Chain.
Owing to the high price volatility in cryptocurrencies, liquidity providers (LPs) using the most popular AMMs like Uniswap or PancakeSwap have high exposure to two types of price risk: impermanent loss and slippage. Impermanent loss occurs when any profit from a change in the price of an asset deposited into a 50/50 liquidity pool (e.g., ETH/DAI) is removed by arbitrageurs, who profit from trading on the price discrepancies until the market price and pool price are in equilibrium.
Wide price fluctuations also increase slippage — the difference between the quoted and execution price. To reduce the risk of impermanent loss, LPs are required to make large capital expenditures to add tokens to the pool to maintain equal value in the cryptocurrency pair. Since most AMMs only offer fixed token weightings (typically 50/50) and fee models regardless of the market volatility, few other options for improving liquidity are available. This issue becomes worse when you want to swap between stablecoins because their price is meant to be stable.
Bunicorn is a decentralized exchange (DEX) on the Binance Smart Chain (BSC) network offering investors yield-earning opportunities through liquidity pools and liquidity farm mining with unique time-locked rewards wrapped into tradable NFTs.
The automated market maker (AMM) protocol has designed liquidity pools that reduce risks and improve capital inefficiencies prevalent in popular AMM models like Uniswap and PancakeSwap. Two highly capital efficient liquidity pool models are offered through one seamless interface:
- Flexible pools with up to 8 tokens, with any weight (Balancer-style)
- Stable pools with super low slippage and high capital efficiency for stablecoins (Kyber DMM-style)
Additionally, to minimize price depreciation caused by liquidity providers immediately selling off rewards, Bunicorn offers high APY liquidity mining farms with a novel NFT reward vesting model.
AMMs have introduced diverse approaches to lower the risk of impermanent loss and high slippage on Ethereum. Curve reduces these price risks by using similarly priced assets (e.g., stablecoins or wrapped Bitcoin). Because these assets are more highly correlated, price volatility is minimized.
Balancer offers pools with eight tokens and arbitrary weights. When an LP chooses to maintain a higher weight in certain assets (say 80/20), less capital is required to add tokens in higher weighted tokens to maintain the equal value of the tokens.
Kyber DMM introduced its highly capital efficient Dynamic Market Maker (DMM) in April. Kyber DMM uses amplified pools with dynamic fees that increase or decrease in periods of high or low volatility, respectively, according to an AMP factor. In this way, the DMM optimizes returns by reducing volatility.
Bunicorn’s solution to reducing the high capital requirements of current AMMs is to combine the Balancer and Kyber DMM models into a single seamless UI that addresses all of the problems above with the following features:
Balancer-style Flexible AMM pools for swapping between standard BEP20 tokens with a customizable number of assets and arbitrary weights within a pool to lower the risk of impermanent loss.
Kyber-style Amplified pools that allow swapping between stablecoins with lower slippage and higher capital efficiency.
Liquidity providers have the option of joining multi-token pools with a single asset. Smart order routing can automatically split a swap across several pools for optimized pricing.
Bunicorn Flexible pools can contain two or more tokens (up to eight), each with an independent weight representing its proportion of the total pool value.
There are two types of Bunicorn Flexible pools: Shared pools and Smart pools.
Shared pools are “public” flexible pools whose parameters are fixed. Anyone can add or remove liquidity and swap tokens in the pools.
Smart Pool — The Liquidity Bootstrapping Pool
Bunicorn is bringing the Balancer-style liquidity bootstrapping pool (BBP) to the Binance Smart Chain. The pools have been specially designed to distribute tokens fairly and bootstrap liquidity in token launches, both weaknesses of current AMM models.
The Smart pool is a highly flexible pool allowing the creator to change settings at any time, including token weightings, swap fees, and the stop and start of trading.
Bunicorn Stable pools are customized for stablecoin trading, with the following advantages:
- Amplified pools with high capital efficiency. LPs can adjust the pricing curves of any stablecoin pair using a special amplification factor known as ‘AMP.’ Whenever there is a change in token numbers in the pool, AMP will dynamically adjust and amplify the balance to improve liquidity and slippage.
- Lower trade slippage due to high capital efficiency.
- Dynamic fees to optimize returns for liquidity providers, adjusted based on market conditions to maximize returns for liquidity providers and reduce the impact of impermanent loss.
There are a few limitations to a Bunicorn Flexible pool.
- BEP-20 Tokens
- Minimum Bound Tokens: 2. A pool must have at least two tokens.
- Maximum Bound Tokens: 8. The maximum number of tokens that a pool can contain is 8
- Maximum Swap In Ratio: 1/2. A user can only swap in less than 50% of the current balance of tokenIn for a given pool.
- Maximum Swap Out Ratio: 1/3. A user can only swap out less than 33.33% of the current balance of tokenOut for a given pool.
- Minimum Swap Fee: 0.0001%. There is a minimum swap fee of 0.0001% to counteract any unfavorable pool rounding.
- Maximum Swap Fee: 10%. This is to prevent malicious pool controllers from setting predatory trading fees.
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