Shells were the oldest form of money and now they are the newest
Today, the Shell Protocol is launching its first stablecoin liquidity pool at https://shellprotocol.io. Shell pools have five features worth emphasizing:
- Deep stablecoin liquidity
- Reserve weights
- Protections against a broken peg
- Dynamic fees
- Interoperability with aTokens and cTokens
These five features incorporate facets of several DeFi protocols: Curve, Balancer, mStable and Mooniswap. Like Curve, Shell can facilitate large stablecoin-to-stablecoin trades with minimal slippage. Like Balancer, Shell pools can have weights. For example, our maiden pool will have target weights of 30% DAI, 30% USDC, 30% USDT and 10% SUSD.
Similar to mStable, Shell pools have minimum and maximum allocations for each stablecoin. For example, the pool must always have between 3% and 57% of a given stablecoin. This ensures that if a reserve permanently loses its peg, liquidity providers won’t lose all of their capital. Without these protections, a single broken peg can drain the entire pool as traders swap the worthless stablecoin into the pool and take out the viable stablecoins. This will continue until there is no value left. Therefore, the more stablecoins added to a pool, the riskier it gets because the more likely it is for a stablecoin to de-peg. That is why Shell pools have safeguards.
In addition to charging a fixed fee on every swap, Shell pools charge a dynamic fee that increases in proportion with the pool’s slippage. The more a stablecoin deviates from its peg, the higher the fee assessed by the pool. This is a mechanic that is similar to Mooniswap’s dynamic fee. Dynamic fees redistribute profits form arbitrage traders to liquidity providers.
Not only can Shell facilitate trades between stablecoins, it can also facilitate direct trades between Aave and Compound. For example, you can trade between aUSDC and cUSDT. Therefore, moving funds between lending pools on Shell does not require ZapperFi.
The best part about Shell is its flexibility. Each of these behaviors can be fine tuned by adjusting parameters, and these parameters can be changed dynamically post deployment. This allows Shell pools to adapt to new use cases and market conditions. Subsequent iterations of Shell will add even more flexibility. The ultimate goal is to create an operating system for stablecoin liquidity pools that can implement arbitrary stablecoin AMMs.
Currently, $SHELL has no active liquidity mining program. The governance layer has not yet been built and more information will be shared soon, but nothing has been finalized. There was a precedent set by Uniswap allocating tokens to early adopters. While this makes logical sense, Shell can offer no certainty regarding retroactive rewards. In short, there may or may not be retroactive rewards. If you have suggestions for our liquidity mining program, please join our discussion on Discord.
This is just our first pool. If there is a specific pool you want Shell to launch next, either USD-to-USD, BTC-to-BTC or ETH-to-ETH, please reach out on Telegram, Discord, or send an email to firstname.lastname@example.org.
Shell has undergone two separate audits from Consensys Diligence and ABDK. However, this is no guarantee of security. Shell liquidity pools are novel and complex AMMs. As such, the protocol is still in beta phase. If you would like to be a liquidity provider, please exercise caution and do not risk funds you cannot afford to lose.
Shell is more than just an AMM protocol. Our vision is to use stablecoins as building blocks to create an internet monetary system: a borderless, programmable medium of exchange accessible to all. If you would like to learn more, please read our white paper. It will be a long voyage and we are only now leaving the tranquil waters of our harbor behind.
We are expanding the core team and are actively hiring. If you are interested in creating an internet monetary system and you have experience working in solidity, or have a deep understanding of mathematics, please reach out! email@example.com.