Another day another token launch… or several. But this one is different. We have all heard of an Automated Market Maker (AMM) and how they work… essentially balancing liquidity in a trading pool. But what about elastic tokens? What happens to the x*y=K equation that is used by UniSwap and SushiSwap, when one of the tokens in the pair is elastic? Well, an error occurs and a manual adjustment is required.

That’s where ElasticSwap comes in.

Why an Elastic AMM?

We came up with the idea for an elastic AMM following another project the core team was involved in called ElasticDAO. ElasticDAO was a fair governance DAO that prevented any one individual from having outsized influence over governance. Each time a new entrant joined the DAO by depositing ETH in the treasury, a rebase occurred. The team learned first-hand, the difficulty of not having an AMM that worked with a rebase token. This is one of the reasons the community voted to focus attention on ElasticSwap… building out the infrastructure around rebase tokens. The beauty of open-source code is that you can always go back and try again…

How does ElasticSwap solve the rebase problem?

ElasticSwap solves the rebase token problem by adjusting the traditional x*y=K equation to account for what our quant calls “decay”. When a rebase occurs, the supply of the base token pair goes up or down, thereby creating an imbalance in the trading pair. ElasticSwap sets the rebase aside in whichever pair is out of balance and incentivizes the next entrant to “fix” the imbalance by entering with only the amount needed to fix the imbalance, plus any additional LP position the entrant wants.

Examples with USDC / AMPL pools (10% positive rebase):

If using ElasticSwap:

Pool balances before rebase:

10000 (0 decay) AMPL / 10000 (0 decay) USDC, 1 AMPL costs 1.0001 (repeating)

USDC Pool balances after rebase:

10000 (1000 decay) AMPL / 10000 (0 decay) USDC, 1 AMPL costs 1.0001 (repeating) USDC

If using Uni/SushiSwap:

Pool balances before rebase:

10000 AMPL / 10000 USDC, 1 AMPL costs 1.0001 (repeating) USDC

Pool balances after rebase:

11000 AMPL / 10000 USDC, 1 AMPL costs ~0.90917356 USDC

In the above example, to solve for the decay, the next entrant to the pool could enter with 2000 USDC and 1000 AMPL.

Ampleforth Partnership

We are excited to launch with Ampleforth as our partner. Ampleforth founded this space back in 2018, and we can think of no better partnership for day 1. We are also having conversations with several other elastic supply token projects and will be focusing heavily on onboarding these projects once the platform is launched and proven.

ElasticSwap will launch on Avalanche. We want to go where the project will have the highest possible support. We believe that the low gas fees and Avalanche’s generally supportive environment towards innovative projects will result in a faster early growth cycle. We will be looking to bridge $TIC and launch the platform on Ethereum Mainnet and other EVM chains shortly after our initial launch.

**DISCLAIMER: $TIC IS STRICTLY A TOKEN TO GOVERN THE DAO AND ITS ACTIVITIES. IT HAS NO MONETARY VALUE.**

$TIC staking and emissions went live on March 16th. The DAO vault is the only entity getting any sort of pre-mine (652,560 TIC tokens). Everything else is emitted via the staking pools. There was a pre-seed that was created for ElasticDAO token holders. They were given preference and were able to deposit their tokens in exchange for a private vault that will emit 10% of all emissions.

There was a separate seed round for investors to put up USDC with the ElasticSwap vault matching with $TIC for the initial liquidity pool on SushiSwap.

The team, DAO and pre-seed vaults will be open at launch, but will not begin to receive emissions until 24 hours after the launch. Slightly under 61k $TIC will be emitted the first week with the supply after 6 years projected to be around 4.765m, any changes via protocol governance notwithstanding.

What’s next?

We will announce the exact date of ElasticSwap UI launch with a blog post outlining everything. The initial pool will be in partnership with Ampleforth. Additionally, in the coming months, we will look to integrate with 1inch, allowing for greater infrastructure integration.

In the meantime, join the conversation, provide any feedback and come say hello!

Discord discord.gg/elasticswap

Website https://www.elasticswap.org

Twitter @elasticswap

Github https://github.com/elasticswap

Audit Report https://code4rena.com/reports/2022-01-elasticswap/