We are pleased to announce the mainnet beta launch of the unshETH vdAMM! As part of a governance bootstrapping programme, 1 million USH will be made available to early vdAMM users in the form of vdUSH rewards.
This initiative aims to bring new users, trading volume, and governance participants into the ecosystem, ultimately leading to the widespread adoption of vdAMM and its integration with decentralized exchange (DEX) aggregators and analytics platforms.
The vdAMM Launch
The validator decentralization Autonomous Market Maker (vdAMM) is a novel approach to liquidity provisioning that aims to provide enhanced capital efficiency and improved price discovery for digital assets. With the vdAMM's novel design, users and LSD protocols no longer have to choose between earning ETH staking yield, swap fee APR, and DeFi utility.
Here's what the vdAMM does:
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Provide highly efficient concentrated LSD-LSD and LSD-ETH liquidity by pooling together all LSD protocol liquidity under the unshETH basket
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~95% of all unshETH TVL will continue to earn native ETH staking yield (~5% is targeted as native ETH to facilitate LSD-ETH swaps)
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All supported LSDs are treated equivalently on the basis of the ETH backing them with zero slippage.
- 1 ETH equivalent of any supported LSD can be swapped for 1 ETH of any other supported LSD in the basket (minus fees).
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No swap can occur beyond the configurable maximum weight for each individual LSD, creating isolated risk baskets beyond which tail risk is minimized.
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In most cases, vdAMM LSD-LSD swaps will be substantially cheaper to users than existing AMM DEX:
- LSD-LSD swaps will cost ~1-3 bps in base fee.
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vdAMM will charge dynamic fees based on whether swaps bring unshETH basket closer to the governance decided target weights.
- Dynamic fees will be 0 when swaps help rebalance the unshETH basket towards its target weights.
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The vdAMM dynamic fee curve will also be applied to minting / redeeming unshETH
- Depositing a LSD that is under target weight to mint unshETH will be free
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Upon launch, 100% of swap fees and unshETH mint/redeem fees will accrue to unshETH holders
By simply holding unshETH, users can earn ETH price appreciation + ETH staking yield + mint/redeem fees. This makes unshETH's sustainable "real yield" higher than any other ETH LP token or staking product. All this while staking with a diversified set of LSD protocols with zero leverage. Additionally, users can further use unshETH in DeFi and beyond - e.g. unshETH-USDC liquidity farming, accessing Omnichain DeFi by bridging to BNB Chain, or borrowing against unshETH (soon™).
Please see the official docs for a more detailed and technical overview of the vdAMM such as the fee curve setting:** https://docs.unsheth.xyz/vdAMM**
vdAMM vs Existing Liquidity Sources
unshETH is designed as a liquidity hub for LSDs, and the vdAMM offers superior pricing and routing to existing DEX pairs.
Take the cbETH-rETH swap example below – even with charging a dynamic fee of 0.66% to compensate for the risk of taking on cbETH above its target weight (up to its maximum weight), the vdAMM still offers a higher output amount compared to existing dex sources (using 1inch). Once vdAMM is integrated into aggregators like 1inch, users will be able to route most of their LSD swaps through unshETH, accruing fees to unshETH holders.
vdAMM Governance Bootstrapping Programme Details
Motivation: To attract new users and increase trading volumes on the platform, we are launching the vdAMM governance bootstrapping programme. This programme will provide 1 million USH in rewards, distributed as locked/staked vdUSH to eligible users. The rewards will be made available until the vdAMM achieves escape velocity, integrating with DEX aggregators and analytics platforms.
Reward Distribution Mechanism
The rewards will be distributed based on a function that considers (a) trading volumes, (b) total fees paid, (c) gas fees paid, and (d) timing of the swaps. Users with consistent activity on the platform will receive higher rewards.
To ensure a fair and balanced distribution of rewards to users, we have devised a proprietary function that takes into account various factors. The reward for a user (Reward) is calculated using the following formula:
** Reward(v, f, g, t)** = α * V(v) + β * F(f) + γ * G(g) + δ * T(t)
This function incorporates four essential factors: trading volume (v), total fees paid (f), gas fees paid (g), and timing of the swaps (t). Each factor is represented by a corresponding function (V, F, G, and T) that calculates the user's contribution based on that specific factor. The weighting factors (α, β, γ, and δ) can be adjusted to emphasize or de-emphasize the importance of each factor in the reward calculation.
For instance, V(v) might be an exponential function that rewards users with higher trading volumes more generously. Similarly, F(f) and G(g) could be logarithmic functions that ensure a fair distribution of rewards based on fees paid, while T(t) could be a linear function that takes into account the timing of the swaps, rewarding consistent activity over time.
Precise weighting factors are taking into account in-depth analysis and optimization to achieve the desired balance in reward distribution - similar to the initial USH airdrop. By utilizing this multi-factor reward distribution mechanism, the vdAMM governance bootstrapping programme ensures that users who actively contribute to the growth and success of the platform receive higher rewards.
To participate in the vdAMM governance bootstrapping programme, follow these steps:
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Navigate to the Swap page: https://unsheth.xyz/swap
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Execute an LSD<>LSD swap OR an LSD<>ETH swap
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Trading on more pairs will result in more points at the end of the programme!
By participating in the vdAMM governance bootstrapping programme, you will be contributing to the growth and adoption of the unshETH ecosystem. This is an exciting opportunity to be an early adopter of a cutting-edge technology that has the potential to transform the world of ethereum staking, and decentralized finance at large. Don't miss your chance!