Liquidity is critical in DeFi ecosystems. Billions of dollars worth of assets are locked as staked assets to secure Proof-of-Stake blockchain networks. These networks aim to maintain a large number of assets staked across several validators to ensure network security and prevent attacks. Meanwhile, users face the dilemma of staking their assets to earn a passive yield or using them on DeFi protocols.
Liquid staking allows users to simultaneously stake and use their assets in DeFi, maintaining liquidity for these assets.Cosmos-based chains leverage the Tendermint consensus mechanism, an optimized version of Proof-of-Stake consensus, liquid staking Zones like Persistence would unlock liquidity for staked assets in Interchain DeFi.Building an AMM will be the first step in building an ecosystem of liquid-staked assets.
Moreover, throughout the DeFi ecosystem, users lock liquidity in protocols to mint yield-generating assets, such as interest-bearing tokens on lending protocols. Support for these tokens in the DeFi ecosystem would maximize capital efficiency by allowing users to use them while earning their yield in the background.
Dexter is an AMM focused on liquid-staked assets and other yield-generating assets like interest-bearing tokens in DeFi. Dexter would be the first DApp in the Persistence Ecosystem and serve as the first step towards a thriving ecosystem of liquid-staked assets on the chain.
Dexter team requests 450,000 XPRT from the Persistence One community pool to fund, develop and advance the project.
The team will use these resources to grow a dedicated team, marketing and BD efforts, and fund other operational costs.
With the launch of pSTAKE on the Persistence Core-1 chain and the subsequent launch of stkATOM and other staked Cosmos assets, Persistence would solidify its position as the liquid staking hub for PoS.
In addition to stkAssets issued on the Persistence chain, Dexter would also support liquid-staked assets from other zones such as Stride and Quicksilver.
Dexter would bring the best innovations in AMMs from all of DeFi to the Cosmos ecosystem, feature multiple types of pools, and offer customizability on parameters to serve a multitude of users.
Over $5B worth of assets are staked on chains across the Cosmos ecosystem. Persistence One, the Liquid Staking Hub for PoS assets, serves as a natural home to build an AMM that supports liquid-staked assets.The primary driver for liquid staking would be the growing number of use cases for these liquid-staked assets, a decentralized exchange would serve as the base for the DeFi ecosystem of liquid-staked assets.
A team of world-class builders from AstroTech Labs and Yeti Labs is working closely with Persistence Labs to build Dexter.
Persistence Labs - The Persistence Labs is committed to building products, applications, and other tools/services on the PersistenceOne Core-1 chain to further the growth of the Persistence liquid staking ecosystem.
Astrotech Labs - Astrotech labs is a venture studio aimed at driving the adoption of cosmos sdk for enterprise / public blockchains.Astrotech Labs is building the smart contracts for the protocol.
Yeti Labs - Yeti Labs is a leading developer house that brought to life the front end of many blockchain dApps on Terra. They have worked on Dapps like Astroport, Whitewhale, Prism, and Nexus. They have delivered a responsive, functional, and clean user experience. Yeti Labs is now bringing its knowledge and expertise to partner with the Dexter team. Building out the front end for Dexter
Dexter team is committed to the long-term growth of the protocol and the Persistence ecosystem, and aims to align all stakeholders in the development of the AMM.
These are commitments that the team is bound to deliver upon passing of the proposal.
- Development, testing, and maintenance of v1 of the protocol
Dexter_v1 supports the tried and tested AMM mechanisms inspired by the best innovations in all of DeFi, and would offer an optimized experience to traders for yield-generating assets.
V1 would support the following pool types :
Weighted Pools - Inspired by Balancer
Stableswap Invariant (2 tokens) - Inspired by Curve
Stable 3/5 pool - An extension of the stableswap with 2 to 5 assets.
A tentative timeline for the testnet and mainnet launch for v1 and subsequent planning for v2
- Phase 1: Research and specification [September-November 2022]
- Phase 2: MVP Development, Security Audit and testnet deployment [December 2022]
- Phase 3: Mainnet deployment of v1 [January 2023]
- Phase 4: Maintenance and support for v1 and planning for v2 [January 2023 Onwards]
Apart from the development and maintenance of the protocol, the team would also ensure proper documentation and internal as well as third-party audits of the code prior to launch.
Soft commitments are additional features and improvements that the team is willing to pick up after the launch of v1, subject to successful product-market-fit metrics. The team will define the prioritization of these tasks at the appropriate time.
- Instant Unbonding of LP Tokens
LP Tokens on Dexter will be subject to a 7-day unbonding period to be eligible for liquidity mining programs.In the future, Dexter may offer an Instant Unbonding feature to LPs willing to unlock liquidity for a fee, this would be beneficial in a sudden market downturn. Instant LP Unbonding Fees will be charged to LPs who wish to withdraw liquidity from a pool instantly.
- Support for more AMM models
The team would explore more efficient AMM mechanisms to facilitate trading for yield-generating assets and mitigate challenges like impermanent loss and slippage.
- Support for other yield-generating assets
The team would explore the feasibility of supporting more types of yield-generating assets like interest-bearing tokens on lending protocols and liquid-staked assets from other chains.
Technical Design Overview
The following smart contracts will be deployed on the Persistence Core-1 chain :
- Keeper Contract
Dexter Keeper contract keeps account for all the protocol fees collected by the Dexter Vault. Fee charged during swaps by the Dexter Vault is transferred to the keeper contract.
- Vault Contract
The Vault is the core of Dexter; it is a smart contract that holds and manages all tokens in each Dexter Pool. It is also the portal through which most Dexter operations (swaps/joins/exits) take place.
The Vault owner can add new pool types to the Dexter Registery. The Vault charges swap fee on swaps that take place in Dexter pools and the fee is transferred to the Keeper contract.
- LP Token
The LP token contract is the standard cw-20 token contract used for LP tokens minted when liquidity is provided to the Dexter pools.
- StableSwap pool
Dexter’s Stable Pool implements the stableswap invariant for its compute calculations on Liquidity provision / withdrawal and swaps.
- Stable5 pool
Dexter’s Stable-5-Pool implements the stableswap invariant for upto 5 assets in the pool and implements compute calculations on Liquidity provision / withdrawal and swaps.
- Weighted pool
Dexter’s Weighted Pool is based on a particular N-dimensional surface which defines a cost function for the exchange of any pair of tokens held in a Pool which was introduced by Balancer. Dexter’s weighted pool accepts maximum of 8 tokens and the weights cannot be updated once the pool has been initialized.
- MultiStaking Contract
MultiStaking contract takes custody of the LP tokens and issues reward linearly to users based on their staking ratio. It is an extension of the Anchor staking contract but allows staking of more than 1 LP type and also rewards distribution in more than 1 asset.
Multisig and Release of Funds
The team proposes to allocate 450,000 XPRT tokens from the community pool, subject to the following schedule -
- 400,000 XPRT (vested over 3 months) - Used as LP Incentives
- 50,000 XPRT (vested over 3 months) - Used to fund operational costs (Marketing, BD efforts, etc.)
Upon the approval of the proposal, the funds will be transferred to a 3/5 multi-signature account managed by the following individuals and validators:
Validators on the Persistence Core-1 chain :
Abhitej Singh - Strategy and Community at Persistence One
Pratyaksh Inani - Lead, Dexter Zone
If the 400,000 XPRT incentives are not being used entirely, requested funds would be carried forward for the coming months looking at the market conditions, thus ensuring the community funds are used wisely in incentivizing the pools, which will help the overall growth of the product based on the Go-to-Market strategy formulated by the Dexter team.
With this proposal, the Dexter team aims to kickstart the development of a thriving DeFi ecosystem for liquid-staked assets on the Persistence core-1 chain. Based on the feedback from the community and stakeholders of the ecosystem, the team will put up a proposal on the chain later this week.