Up the DeFi Game: Introducing Flamingo
Preparing for Decentralized Finance
Recently, Neo has achieved two major milestones. On August 14th, Neo MainNet integrated State Root Function to support interoperability. On August 18th, Neo, together with Ontology, and Switcheo launched the Poly Network , a cutting-edge interoperability protocol. Already, Poly Network is helping connect heterogenous blockchain networks, ranging from Ethereum to Neo, Ontology, and Cosmos-SDK based blockchains. With Neo3 rapidly approaching, achieving interoperability with key networks mark a milestone for Neo as well as the blockchain community. Now, Neo is better positioned than ever for the official launch of Neo3 by the end of 2020.
Moreover, Neo’s recent developments once again reaffirm its commitment to fostering DEX growth. For a DEX to succeed, it must support core assets and provide sufficient liquidity while delivering a seamless trading experience. To that end, Neo has enabled Nash and Switcheo — two leading DEXes — to flourish in terms of transaction volume. Poly Network is further accelerating the growth of Neo’s DEX. On the day it integrated with Poly Network, TradeHub — Switcheo’s cross-chain — processed more than $10 Million worth in transaction volume on the very first day.
Since the start, Neo has maintained its leading edge by continuously evolving its protocol layer. With Neo3 set to deliver optimized performance and efficiency, Neo is more ready than ever to build the smart economy of tomorrow — and the DeFi solutions of the future.
Three Elements of DeFi: Assets, Markets, and Funds
By leveraging blockchain technology, DeFi represents a new financial paradigm: compossible, programmable, objective, fair, and transparent. Within this paradigm, we strongly believe that public chains will play a key role by providing basic financial tools. For example, Uniswap, Compound, and Snythetix have delivered creative innovations to improve transaction liquidity, token distribution, and asset tokenization. As demonstrated by recent examples, we believe public platforms can provide three key elements which are instrumental to DeFi, namely:
- Assets: A variety of assets for amplified scalability
- Market: A low-friction and highly liquid marketplace
- Money: Stable and well-priced currency as value medium
Currently, Neo is already supporting DeFi’s development by delivering an array of assets and a robust market. Moving forward, Neo is expanding a wider array of assets — from synthetic assets and stable coins — Neo is incubating various projects and agreements to unleash DeFi’s full potential. Underscoring Neo commitment to DeFi, Flamingo — a DeFi project incubated by Neo Global Development (NGD) — has already started development and is expected to be officially launched in mid-September.
Flamingo (flamingo.finance) is a full-stack DeFi protocol integrating crosschain asset gateway, AMM-based swap, synthetic stablecoins, and AMM-based Perpetual. As a pillar of Neo’s DeFi infrastructure, Flamingo rounds out the Neo ecosystem’s DeFi network while also delivering innovative solutions to challenges that Defi are facing, such as:
1. Friction and the lack of atomic cross-chain interoperability: With Poly Network, Flamingo will become the first financial protocol within the DeFi market to support multi-chain asset mobility, thus overcoming single-chain market limitations while delivering unmatched efficiency.
2. Limited efficiency and liquidity due to fragmented resources and over-collateralization: Flamingo will become the first DeFi protocol to fully integrate the AMM liquidity pool and collateral asset pool, thus optimizing capital use efficiency.
3. Lack of long-term, sustainable operation and community participation: To incentivize community participation, Flamingo will distribute FLM — its project token — to participants based on contributions while also developing its value support.
Improving Capital Efficiency by Over 400%
With its breakthrough technology, Flamingo is delivering optimized user experiences by integrating platforms for improved liquidity, capital efficiency, and reduced investor risk. Comprised of five main components, Flamingo offers features such as a cross-chain asset gateway — Wrapper, an on-chain liquidity exchange — Swap, a Vault that integrates asset management functions e.g. stablecoin mint and platform token mining, and Perp, an AMM-based perpetual contract trading platform. These components will be launched in phases, eventually realizing the support of comprehensive cross-chain transfers, reward mining, swap transactions, liquidity pool construction, liquidity supply incentives, stablecoin mint and perpetual contracts. Flamingo has made several breakthroughs in terms of optimizing user journey, integrating platform liquidity, improving capital efficiency and lowering investor risks as compared to the cross-product model adopted by current DeFi platforms.
Centered on the three essential elements of DeFi, the Flamingo is built with a variety of markets and financial products that are closely integrated with each other to ensure a streamlined liquidity flow within all products. As a core component of asset management, the Vault module provides liquidity for swap transactions and staked mining, thus connecting liquidity pools and breaking away from today’s fragmented paradigm to deliver bolstered efficiency. Beyond the product design level, Flamingo’s staking mechanism also promotes liquidity as well as community involvement. The Vault module will use FLM and LP tokens of mainstream assets as stakes while also supporting the usage LP tokens in Swap trading or to provide further liquidity. Under this mechanism, the collateral rate of synthetic stable coins will be reduced by 40% compared to traditional models while capital efficiency will be more than doubled. The liquidity provider can continue to use the synthetic stable currency FUSD as margins for the leveraged perpetual contract platform (Perp) while simultaneously obtaining FLM liquidity incentives via staking. Through these mechanisms, Flamingo promises to deliver unprecedented efficiency and liquidity compared to conventional DeFi protocols, improving investor efficiency by at least 400%.
100% Contribution-based Token Distribution
To drive community involvement in Flamingo — and DeFi under the principle of equality, FLM will be 100% distributed to participants based on contribution. More specifically, FLM will be distributed based on how participants utilize Flamingo; four potential methods of participating in Flamingo are show in the below figure:
1. Staking of cross-chain assets (only for the first two-week Mint-Rush period)
2. Staking of LP tokens obtained by providing liquidity
3. Staking of synthetic stable coin FUSD to provide margin liquidity
4. Participate in governance
Our goal is to distribute FLM 100% based on contribution. Since Flamingo will not have team allocation and private funding phases, a two-week Mint Rush period has been opened up during which a total of 5% of FLM can be allocated to incentivize cross-chain asset traders. During this time period, users can first transfer multi-chain assets through the Poly Network cross-chain protocol before using Wrapper to mint assets based on the Neo token standard which can then be staked in Vault to obtain FLM incentives. During this stage, mainstream assets such as BTC, ETH, and ONT along with stable coins such as USDT will be supported. These transaction funds will become the basis for the liquidity of future on-chain transactions. NGD will contribute to early developments and liquidity provisions, thus will also receive relevant incentives alongside the community.
Open Collaboration for Community Development
With the aim of becoming a full-stack DeFi protocol, Flamingo aims to deliver a comprehensive array of modules and tools to support a variety of use cases, from asset cross-chain and on-chain liquidity provision to deposit assets and reward distribution. Moving forward, FLM is set to become a key Neo-based asset which will comprise fees, collaterals and governance functions.
Flamingo is committed to unleashing blockchain’s potential on a global scale by leveraging cross-chain protocols to optimize asset utilization. By bringing together Neo’s global community, wide-ranged ecosystem and cost advantages, Flamingo will build the foundation for the smart economy of tomorrow alongside Neo.
That being said, Neo’s DeFi infrastructure will not stop at Flamingo. From lending to insurance and index funds, the potential is boundless- and we encourage the Neo community to join us in building Neo’s DeFi ecosystem. At present, even Flamingo’s design is still undergoing optimizations with questions ranging from how to introduce more external asset types to which oracle implementation should be integrated for the Perp module, as well as the open governance mechanism before DAO goes live. As such, we welcome all community participants to proactively initiate proposals to further optimize Flamingo and build a more robust ecosystem.
This is just the beginning. As a community-driven open ecosystem, Neo welcomes all public chains, developers, and investors to build the smart economy of the future with us together.
Flamingo Official Website: flamingo.finance
Medium: https://medium.com/flamingo-finance/
Twitter: https://twitter.com/FlamingoFinance
