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Octan Finance - renovate AMM with high capital efficiency & tailor market making #109

Open grantshares-dapp[bot] opened 6 months ago

grantshares-dapp[bot] commented 6 months ago

Abstract

Octan innovates a novel AMM model with customizable capital efficiency & tailored market making, while keeping simple UX, fungibility & reusability of LP tokens of Uniswap v2. This is done by our invention of a novel price discovery mechanism, namely, Elastic Parameterized Limit Order Book (PLOB), inspired by LOB in traditional finance.

Proposal Information

Description

Fundamental problems

Solution (a novel AMM - Elastic PLOB): transform MM to asset allocation

We invent a novel price discovery mechanism, namely, Elastic PLOB to tailor CE & market making, while keeping simple UX, fungibility & reusability of LP tokens of Uniswap v2. PLOB stands for Parameterized Limit Order-Book, which inspires Octan model.

Octan proposes a novel AMM model, where LPs allocate their liquidity into the pool according to a bonding curve that mimics the general shape of a traditional limit orderbook (LOB). We introduce a novel concept, Elastic Factor, to allow the liquidity concentration of the AMM to be automatically adjusted according to the relative trading size. This elasticity ensures unbounded liquidity, thus the pool never runs out of liquidity regardless of the trading size. Our general Elastic model covers the special case of the constant-product market making model x*y=K. More importantly, it opens a new door to create arbitrary AMM with customized local orderbook shape around the market price as well as tailored liquidity concentration.

The major contribution of this model is that, when the AMM is locally V-shaped, both impermanent loss (IL) and loss-versus-rebalancing (LVR) in this model asymptotically vanish when the trading frequency is high or, equivalently when the pool size is large. Therefore, the pool size will behave exactly like a rebalancing portfolio in the geometric Brownian motion model.

Some other novelties of the model are as follows.

Note: loss-versus-rebalancing (LVR) is an important problem among among Nakamoto challenges proposed by A16Z. Octan Elastic model is a response to the problem.

Flamingo Finance is the leading decentralized exchange on NEO. Flamingo strictly follows the well-established AMM models (invented by Uniswap, Curve), which is lack of flexibility and customization, hence possibly not really suitable for the blockchain ecosystems with low liquidity. Octan Finance fills up that gap for NEO ecosystem.

Octan Finance: market proposition & USP comparison

Spot AMM competition between Octan vs othersVisit https://drive.google.com/file/d/1cd4zz8GgHnPaE8a3RgBBh5EenbiWOHQ3/view?usp=sharing

Motivation

Goals

Octan Finance targets to implement a prototype of spot AMM protocol on NEO-EVM testnet, based on Elastic PLOB model. Ultimately, Octan aims to release full production on NEO mainnet and then becomes Top2 DEX (both spot & perp AMM) on NEO Ecosystem. Octan AMM fits the demands of many customers, and makes them beneficial:

Deliverables & Roadmap

Specify deliverables in detail, including the following info for each:

There are three milestones corresponding with 30-day deliverables.

  1. First 30-day milestones ($10,000 USD ~ 714 NEO at price $14 USD/NEO):
    1. Deliverable 1: complete formal mathematics verifications and research paper on spot AMM (Elastic Parameterized Limit Order Book - PLOB).
    2. Deliverable 2: complete formal mathematics verifications and research paper on perpetual AMM based on virtual liquidity pool.
    3. Deliverable 3: complete simulations and model back-tests.
  2. Second 30-day milestone ($10,000 USD ~ 714 NEO at price $14 USD/NEO):
    1. Deliverable 1: complete spot AMM protocol design
    2. Deliverable 2: complete UX/UI designs
    3. Deliverable 3: complete 20% of functional implementation on NEO-EVM testnet
  3. Final 30-day milestone ($10,000 USD ~ 714 NEO at price $14 USD/NEO):
    1. Deliverable 1: complete a prototype (AMM contracts based on Elastic PLOB) on NEO-EVM testnet, allowing 2 major functions: creating pool and atomic swap.
    2. Deliverable 2: complete a UI for the AMM prototype, allowing users to
      1. Create a liquidity pool
      2. Atomic swap between a pair of two tokens.

Deliverables Verifiability

Community can verify Octan promised deliverables via our published materials.

  1. First 30-day milestones
    1. Deliverable 1: complete formal mathematics verifications and research paper on spot AMM (Elastic Parameterized Limit Order Book - PLOB). => published research paper for community verification.
    2. Deliverable 2: complete formal mathematics verifications and research paper on perpetual AMM based on virtual liquidity pool. => published research paper for community verification.
    3. Deliverable 3: complete simulations and model back-tests. => published results for community verification.
  2. Second 30-day milestone
    1. Deliverable 1: complete spot AMM protocol design => published research paper for community verification.
    2. Deliverable 2: complete UX/UI designs => published research paper for community verification.
    3. Deliverable 3: complete 20% of functional implementation on NEO-EVM testnet
  3. Final 30-day milestone
    1. Deliverable 1: complete a prototype (AMM contracts based on Elastic PLOB) on NEO-EVM testnet, allowing 2 major functions: creating pool and atomic swap.
    2. Deliverable 2: complete a UI for the AMM prototype, allowing users to
      1. Create a liquidity pool => published research paper for community use & verification.
      2. Atomic swap between a pair of two tokens. => published research paper for community use & verification.

Budget Plan

The requested budget ($30k) is used for RnD, designs and AMM implementation (18 man months in equivalence) and frontend hosting:

About You / Your Organization

Short-Bio

The core team of Octan Finance has 5 full-time people, based in Vietnam. We are all OG in crypto space with 5 years of rich experiences in developing blockchain infra and applications.

Core team members (6):

  1. Paven Do, https://www.linkedin.com/in/paven-do/, co-founder & development lead: 5-year blockchain scientist and entrepreneur; Head of FPT Blockchain Labs; co-founder & ex-CTO of Spores Network; PhD at Hong Kong University of Science and Technology.
  2. Tuan Tran, https://www.linkedin.com/in/tuan-tran-698b322b/, co-founder & research lead: 10+ YoE, quant researcher and data scientist (Paris, Toronto), senior DeFi researcher; Former chief economist of MELD LAB Singapore; PhD from Paris-Dauphine PSL University.
  3. Quang Tran, https://www.linkedin.com/in/quangtran88/, MSc: senior smartcontract developer
  4. Phi Truong, https://www.linkedin.com/in/trmaphi/: senior blockchain developer
  5. Manh Tran, junior blockchain developer https://github.com/noobmdev
  6. Long Nguyen, MBA, https://www.linkedin.com/in/maxrogue3107/: senior blockchain business growth, cofounder MG trading

Portfolio of Projects / Past Experience

Our developed and released Web3 products:

Proposal Info :clipboard:

[ {
  "target_contract" : "0x6276c1e3a68280bc6c9c00df755fb691be1162ef",
  "method" : "releaseTokens",
  "params" : [ {
    "type" : "Hash160",
    "value" : "ef4073a0f2b305a38ec4050e4d3d28bc40ea63f5"
  }, {
    "type" : "Hash160",
    "value" : "d0c0e7e5604379f43b03175bcabbe5eda507016d"
  }, {
    "type" : "Integer",
    "value" : "2142"
  } ],
  "call_flags" : 15
} ]

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grantshares-dapp[bot] commented 6 months ago

🚨 This proposal was edited by the proposer.

grantshares-dapp[bot] commented 6 months ago

🚨 This proposal was edited by the proposer.

grantshares-dapp[bot] commented 6 months ago

🚨 This proposal was edited by the proposer.