What’s Ellipsis Finance?
Markets are bleeding today, with Ethereum below $2000 for the first time since May 23rd. Of course, that's just one month, but it feels like a very long time in crypto, so some traders might understandably be interested in cutting some of their losses and trading their assets in for stablecoins. Or maybe, they’ve already done so and are now looking for a venue to swap between different stablecoins efficiently.
On Ethereum, Curve Finance is the go-to address for decentralized stablecoin trading. Launched in 2018 by the Russian physicist Michael Egorov the protocol has since secured its spot among the leading decentralized exchanges. What makes Curve so attractive is that it deals mainly with stablecoins, limiting the impermanent loss traders often experience when depositing assets into a liquidity pool.
Impermanent loss is the difference in value between holding your tokens in your own wallet versus depositing tokens into a liquidity pool. The prices of assets in liquidity pools are determined through a mathematical formula and can differ from prices outside the pool. Ideally, that difference is remedied by arbitrageurs taking advantage of the opportunity to restore the price. However, if you cash out before that happens, an impermanent loss can turn permanent.
Curve employs an automated market maker (AMM) that swaps tokens within its pools like all decentralised exchanges. However, curve’s AMM performs superior to other liquidity providers offering at worst a hundred times higher market depth and at best a thousand times market depths for the same amount of crypto users lock in to provide liquidity.
Market Depth is the ability of a market to absorb larger orders without distorting the price. In traditional markets orderbooks, market depth considers all ask and bid orders. Usually, the more buy and sell orders an orderbook contains, the higher the market depth.
As Ethereum gas fees continue to be an issue for frequent traders, more and more attention has gone to the Binance Smart Chain ecosystem. With Ellipsis Finance, BSC has its own version of Curve FInance.
Ellipsis is an authorized fork of curve finance built on the Binance Smart chain. It charges no fees on deposits nor withdrawals and currently supports BUSD, USDC and USDT swaps. It boasts more than 4.1 billion in volume — which might arguably have to do with the bearish trend these days.
The native token of the platform EPS has a marketcap of 104 million as of today.
The protocol uses a bonding curve for swaps that enable Ellipsis Finance traders to swap their stablecoins with very low slippage. On other decentralized exchanges, traders have to accept quite a high slippage when it comes to trading digital assets. Slippage refers to the percentage price change they’re willing to accept. For example, when trading an asset worth $100 and setting slippage to 10%, it means that the trader is willing to even sell at 10% lower/higher.
The fee for swapping on Elipsis is with 0.04%, very attractive for traders. Additionally, by providing liquidity to the pool, traders can farm EPS tokens. The EPS token is a revenue token that earns a percentage share of all swapping fees. All fees are split between liquidity provers and the staking pool.
To start staking EPS, holders have to vest their EPS holdings first for 90 days. When withdrawing before the 90 days have passed a 50% early exit penalty is deducted, and distributed to users who continue locked up in the staking pool. Once staked, traders can start claiming their share of the trading fees.
The total supply of EPS is 1 billion which is scheduled to be released over 5 years. The majority of the supply is going to liquidity providers while up to 250 million tokens are airdropped to holders of the Curve governance token veCRV. The Ellipse team continues working closely with Curve and is committed to the same core values.
The decentralized, trustless architecture and zero-fee withdrawals and deposit make for a very attractive stablecoin swap protocol. In terms of security, the platform has been audited by Hacken, a known security auditor and the rewards contract is locked in a 5 person multi-sig wallet.
EPS will be trading on Bitcoin.com Exchange with USDT pairs.