Introducing Pablo — Our Protocol Owned AMM on Picasso
We are excited to reveal Pablo, a new generation of decentralized exchange (DEX) that will play a significant role in the Picasso ecosystem and broader Kusama DeFi space. Pablo grounds our vision for innovation by being one of the first protocols to launch with DEX-owned liquidity, introducing another novel concept that leverages the underlying Substrate tech of our Picasso — our re-invented parachain.
Demonstrating the power of Substrate through a new generation of DEX
What makes Pablo so different? Simply put, Pablo combines the concept of protocol-owned liquidity within the design of a DEX.
The majority of DEXs in DeFi rely on the outdated design of using their own token as farming rewards, creating short-term incentives that ultimately lead to unsustainable selling pressure and unloyal liquidity. To buy the Pablo token, users will bond their liquidity provider tokens (LPs) to purchase $PBLO at a discount. The LPs are then held by the Picasso treasury, allowing this to become permanent liquidity, and thereby enabling Picasso to act as a market maker in perpetuity. With the token being 100% community-owned, 80% of trading fees will be distributed to LPs and 20% to Pablo token holders who are staking. For every token distributed through the bonding program, the Picasso treasury receives the same amount of tokens. While the tokens above are vested for five days, the Picasso treasury tokens are vested over two months. This new concept creates significantly higher net returns from selling our tokens through bonds, unlike the standard yield-farming methods.
The relationship between Picasso and Pablo is paramount as it ushers in the broader strategy for exponential growth within our ecosystem. Pablo will enable users to trade and provide liquidity for a significant number of assets, with our Mosaic pallet enabling us to bring various EVM tokens to Picasso from launch. Therefore, the $PBLO token is a core pillar of our DeFi ecosystem, gaining value through governance directives and from profit sharing of trading fees. By Picasso owning the DEX LP tokens, we ensure permanent liquidity that also continues to earn the treasury revenue through fees. Additionally, the treasury will continue to allocate incentives for further liquidity on Pablo. Even when incentivising yield-farming in the standard way, Picasso and Pablo continue to retain significantly more value since higher yield for farming. This subsequently leads to improved liquidity, leading to further trading that continues to increase the fees generated for the Picasso treasury. A DEX is the backbone of any DeFi ecosystem, with Pablo providing the essential automated market-making (AMM) role whilst pushing the boundaries and rethinking how a protocol is designed.
In order to achieve sufficient initial liquidity on Pablo, we will be seeding the liquidity pools for PICA, KSM, CHAOS, and PBLO pairs.
First we will open the Kusama <> Picasso channel, thus allowing KSM to be bridged to Picasso and, therefore, used within the DEX. Most importantly, we will also have our Mosaic pallet live, allowing us to bring EVM assets to Picasso to open the door for sufficient stablecoin liquidity. Our focus will be establishing deep liquidity for our starting pairs before moving forward to our expansion phase and rapidly adding more EVM and Substrate assets.
A 100% community-owned token where Incentives are aligned and value is fairly distributed
The Pablo DEX combines multiple algos, allowing users to interact with stableswapping, constant product AMM curves and more. Whilst DEX-owned liquidity is an innovative concept, the rest of the Pablo DEX will provide users with a familiar DeFi experience that allows them to swap between various assets, thereby establishing the heart of DeFi on Picasso and the broader Kusama ecosystem.
The $PBLO token itself will be 100% community-owned, with distribution only to the Pablo DAO, the Picasso treasury, and public buyers. We have positioned $PBLO to become a valuable token in its own right, with 20% of fees generated being distributed to $PBLO holders and the remaining 80% going to DEX LPs. Naturally, Pablo token holders will play a significant role in the protocol governance, with the core variables of the protocol such as pools, fees, default routing, and whitelisted LPs for bonding being controlled by the community.
This is why we perceive Pablo as the grounding force of our extensive DeFi ecosystem on Picasso, with various additional AMMs planned to be released after launch. Not only will Pablo be one of the crucial protocols within our own ecosystem, but through our unique growth approach, we plan to establish Pablo as the leading DEX on Kusama and for Substrate assets. Subsequently, Pablo will continue to gain trading volume and liquidity as we roll out further Picasso protocols, such as Angular, our isolated lending market. Ultimately through Picasso’s treasury design and extensive ecosystem of protocols with our Mosaic pallet being one of the critical core pieces, Pablo hooks into a well-needed entry-point for EVM assets to be bridged to Kusama, thereby attracting sufficient liquidity incentives that allow it to have the highest volume on Kusama.
Pablo thus becomes one of the important catalysts for the Kusama season to fully start.
If you are a developer with a project you think fits our ecosystem and goals, and you would like to participate in our interactive testing landscape at Composable Labs, reach out to me on Telegram at @brainjar.