Concentric 101

In theory, providing liquidity to Concentrated Liquidity Market Makers (CLMMs) is a great way to earn passive income - just deposit your tokens and watch the swap fees roll in. However, managing your liquidity position can be a hassle. That’s because when you deposit liquidity, you only earn fees when the price of the LP pair falls within a predefined range. If it goes outside that range, you don’t earn anything and your tokens sit idle.

Consider this example.  If you deposit into an ETH-USDC pool and you set your range from 1800 to 2000, you only earn fees when ETH is trading at a price of 1800-2000 USDC.  Anything other than that and you get nothing!  It seems like you’re either losing capital to impermanent loss, or losing time and gas to monitoring your position.  Isn’t there any alternative?

Introducing Concentric

This is where Concentric comes in. Instead of having to constantly monitor your LP positions, Concentric has created an extremely useful product that does it for you: our flagship product, Concentric Vaults.

Using these vaults, Concentric manages liquidity on AMMs like Uniswap v3 and Camelot v3 to produce optimal returns in a completely autonomous fashion.

So, how exactly does this work?

Once the app is live, you’ll be able to deposit assets into Concentric Vaults, and based on a set of customized factors, the Vaults manage these assets to earn the highest yield possible. These factors include things like the potential yield of an LP pool, underlying assets’ risk profile, and pool stability. In exchange for their deposit, users will receive spNFTs - essentially, receipt tokens that can be used in more advanced products on Camelot.

At first, all Vaults on Concentric will use Camelot V3 to manage assets, but the protocol is built to interact with any concentrated liquidity pool. So, you can bet that there will be expansion in the future in terms of assets as well as DEXs supported. There will also be many different strategies added to Concentric over time to fit all sorts of risk/reward profiles.

The Role of CONE and xCONE

Now, let’s get to the protocol’s token: CONE. CONE will primarily be used as an incentive token to reward users of Concentric, so if you deposit into a vault, you’ll earn CONE tokens as payment based on the amount of liquidity you provide.  The more assets you deposit, the more CONE you earn. As we’ll explain shortly, the amount of CONE tokens designated for emissions is 44%, so APYs will be pretty generous early on.

Users will also be able to stake their CONE for xCONE, unlocking an entirely new set of features. These include:

Real Yield: 50% of all vault fees are paid to stakers, which incentivizes people to lock up their CONE. xCONE utilizes RP or “Reward Points.” These function in a similar way to GMX and MP. The longer someone stakes, the more RP they will accrue, which will entitle them to a higher share of the staking pool. Concentric will issue 500,000 RP over 2 years, and recycle the RP from unstaking.

Incentives: xCONE will also be used as an incentive for using Concentric vaults. So, if you hold xCONE and deposit assets into the Vaults, you earn CONE, xCONE, and a slice of half the protocol fees.

Governance: Another perk of staking your CONE is the ability to take part in governance. xCONE holders will be able to vote on where CONE and xCONE emissions are directed, so users will really want to pay attention and vote.

So, say you’re a truly dedicated user of the protocol. You’ve staked your CONE for xCONE, and you’ve deposited assets into the ETH/USDC Vault. Because you own xCONE, you can vote to increase your own rewards by voting on maximum emissions of CONE and xCONE to that ETH/USDC Vault.

That’s a nice power to have, and it’s just another incentive to invest in the token and stake it. Keep in mind that some users might not be individuals, but other projects looking to incentivize people to deposit into their LP. Those projects can partner with Concentric, buy CONE, stake it, and vote to direct emissions to their native token’s Vault. Theoretically, this will draw more users to deposit into their vault, which would deepen their Camelot V3 liquidity while also helping Concentric and CONE/xCONE holders.

CONE Distribution

Now that we’ve covered token utility, let’s look at the proposed distribution of CONE tokens:

CONE will have a max supply of 1,000,000 tokens with the following distribution:

Emissions – 44% – this will incentivize Concentric Vault users as well as stakers

Public Sale – 20% – this will be distributed via launchpad

Private Sale – 15% – this will go to partnerships within the Arbitrum/Ethereum ecosystem

Camelot LP – 10% – this will fund initial liquidity for CONE to absorb anticipated trading volume

Team – 7.5% – this will go to the team with a six month cliff before any tokens are liquid.

Marketing/Development/Advisors – 3%

Overall, about 38.6% of the total supply will be released as CONE initially, and the rest will either be released as CONE over time or as vesting xCONE. All xCONE can be unlocked as CONE after a six-month vesting period.

Dynamic Buybacks

One feature we’d like to highlight is dynamic buybacks.  Dilution is an ever-present threat in DeFi, so we’ve designed the protocol with a mechanism in place to counteract it.  Within the protocol, there will be a separate Buyback Pool specifically designated to buying back tokens on a weekly basis, funded by 10% of fee income.

These weekly buybacks will have 2 components: fixed buybacks and variable buybacks.

The fixed buybacks are self-explanatory. A set percentage of Buyback Pool funds will be used to buy back CONE every single week to reduce inflation, regardless of its price.

The variable component will depend on CONE’s price activity. When demand is low, or during a sharp decline, the protocol will ramp up its buybacks to help support price. And when demand is high, the funds that would otherwise buy CONE will instead be used within Concentric Vaults. Not only does this boost Concentric’s TVL, but it also boosts the total amount of generated fees, which means higher payouts for stakers and more money directed to the Buyback Pool.

Short-Term Roadmap and Long-Term Vision:

Roadmap:

Concentric has much more planned on its roadmap. We will be releasing our backtest and live test APR soon, and once the audit has been completed, we will launch ETH-USDC and CONE-USDC vaults. After those, Concentric will start researching additional qualified pairs to add to vaults, and proceed with the same structure and rigorous testing that came with our ETH-USDC research.

Vision:

Concentric wants to become a true decentralized market maker. More often than not, trading on DEX’s results unwanted slippage and inefficient price entries and exits that cause long-term sunk costs to trading in DeFi. We want to give better prices and deep liquidity to traders, and reward LP’s with a portion of fees and CONE/xCONE that they can stake for additional ETH-based yield. Over the next 6-8 months, Concentric will transform itself in a true liquidity hub for yield farmers, traders, and potentially lenders and borrowers to become the center of liquidity for Arbitrum.

More details about both of these events will be coming soon on Concentric’s Twitter and Discord, so make sure you check out both of them!