The decentralized finance industry currently consists of approximately $100 billion in deposited assets. We can therefore say with certainty that DeFi is one of the most valuable innovations in the entire blockchain world. With DeFi, an ordinary person can put their money into a smart contract and enjoy (sometimes very high) interest rates.
He or she can therefore take responsibility for his or her finances and thus eliminate the middle man. In addition, DeFi helps democratize financial services and various components within the industry. From data collection and management to insurance and stable digital currencies ( stablecoins ). We are sure that DeFi has a very bright future ahead of us.
Curve Finance is built according to a simple concept and is one of the most respected DeFi platforms. Simple yet effective, with the sole purpose of making DeFi easy for everyone. However, this article is not about Curve Finance, but about a promising authorized fork of it, also specializing in stable digital currencies: Ellipsis Finance.
To give you a better idea of Ellipsis Finance, we first explain what Automatic Market Makers are. We will then give you an overview of Curve Finance. Still important, since Ellipsis, without Curve, simply wouldn’t exist. After that, we will go into more detail about the EPS token and how you can also earn money with it.
What are Automated Market Makers (AMM)?
Traditional markets work because people create order books to trade. Buyers always want to buy a product for the lowest possible price, while for sellers this is of course the other way around. In reality, there is always a small difference between these prices. This is solved by relying on “market makers”. These are traders who are willing to buy or sell their goods, items, coins at any specified price. In other words, they “make” the market.
Until now, people as market makers have been very successful for the traditional markets. Today, however, technology is so advanced that these individuals can be easily replaced. Through code, developers write smart contracts to automate the market creation process. This algorithm helps determine a price for the crypto coins traded on the exchange.
Since everything now happens automatically, we speak of Automatic Market Makers (AMM). These AMMs paved the way for decentralized exchanges (Decentralized Exchange or DEX) as we know them today. The DEXs in use today are built in such a way as to maximize the profits that the traders can make. Some well-known examples of DEXs are Pancakeswap , Uniswap and Curve Finance.
What is Curve Finance (CRV)?
Founded in January 2020 by Michael Egorov (also co-founder of Nucypher ), Curve Finance is a fully decentralized exchange specifically made to trade stable currencies ( DAI , USDT, TUSD, sUSD, BUSD and USDC) and various tokenized versions of Bitcoin (WBTC, renBTC and sBTC). It is completely based on the Ethereum blockchain where users can trade their assets. Because it focuses almost exclusively on stable tokens, it is almost impossible for liquidity providers to suffer a transient loss, also known as an impermanent loss.
The platform is one of the leading Automatic Market Makers and manages to outperform its competitors by offering the best APY, by automating the process of liquidity amplification.
Curve has become extremely popular due to the special algorithm it uses. The formula is specifically designed to facilitate trades that take place within a roughly similar range. The system does not affect force majeure, but as long as the respective value of the tokens remains the same (as with stablecoins), the formula does its job very well. This in turn leads to extremely low slippage, even for very large transactions. Curve can thus meaningfully compete with some centralized exchanges and the OTC providers with the best liquidity.
What is Ellipsis Finance (EPS)?
Ellipsis Finance is simply an authorized fork of Curve Finance, but on the Binance Smart Chain (BSC). Ellipsis was officially launched in March 2021. The (until now anonymous) Ellipsis team is committed to the core values of Curve Finance, and is supported by the CRV team. For the user of Ellipsis Finance, this means that they can enjoy the decentralized and reliable architecture of Curve Finance. Also, there are no fees while making a deposit or withdrawal on Curve Finance.
In addition, users would have no liquidity constraints and experience extremely efficient stable currency exchanges. The stable coins that can currently be traded on Ellipsis are: BUSD, USDC, USDT, fUSDT, DAI and TUSD as well as a tokenized version of Bitcoin i.e. renBTC. This is an ERC20 token built on Ethereum’s network, linked to Bitcoin.
What is the EPS Token?
The EPS token is the “native token” on the Ellipsis Finance platform. It is this token that provides value for both token holders and liquidity providers. By staking EPS you can earn compensation in the form of EPS tokens. The very low trading costs (0.04%) are split equally (50%-50%) between EPS strikers and liquidity providers (Liquidity Providers Reward Pool).
The EPS strike pool has no mandatory “lock-up”. So you can always claim your EPS whenever you want without consequences. Liquidity providers, however, would have to hold their EPS for more than 3 months to receive all the rewards. Users who claim their fees before their lock-up period expires would be required to pay an “Early Exit Penalty” of 50% of their returns.
The revenue from this tax is distributed among users who still keep their EPS locked. For example, the most loyal EPS holders will get the maximum benefit after the 3-month waiting period. We’ll go into this a little more deeply in a moment.
The total supply of EPS tokens is set at one billion (1,000,000,000) tokens with an issuance schedule over five years. In the first year, 30% of the rewards would be distributed. 5% in the first month, 4% in the second month, 3% in the third month and the remaining 18% spread over the rest of the year. So that is 2% every month after the third month.
In the second, third, fourth and fifth years, 12.5%, 6.25%, 3.125% and 3.125% rewards would be awarded respectively. These tokens would be distributed in multiple ways. A majority of 55% of the tokens would be delivered in the form of Liquidity Provider Rewards that would be distributed continuously over a period of 5 years at a gradually decreasing percentage.
For the remaining 45% of the tokens, 25% of the total token supply would be in the form of a veCRV airdrop that would be distributed weekly. 20% of the total token supply would be reserved for the team’s development fund for one year. These funds would be released continuously.
How to earn EPS on Ellipsis Finance?
There are several ways to earn EPS on the Ellipsis Finance platform.
Deposit (stable) coins into an Ellipsis exchange pool to receive LP tokens.
To keep the slippage low, the Ellipsis Finance platform needs liquidity. As a user, you can help provide the required liquidity by depositing your stable coins into liquidity pools. At the moment this is possible for 3Pool (BUSD + USDC+ USDT), DAI, TUSD, fUSDT and REN . As the platform collects trading fees, the value of the LP tokens grows. This growth is shared with the liquidity providers.
Deposit LP Tokens and/or EPS/BNB LP Tokens and earn EPS Tokens
1. Deposit your LP tokens into the reward contract to earn EPS.
EPS is the token within the Ellipsis protocol that can be deployed to receive a portion of the transaction fees generated when users perform exchanges. EPS is distributed as an incentive to liquidity providers. This process will be better known to you as “liquidity mining ”.
On the “strike” page on the Ellipsis Finance website, there are currently several LP tokens to choose from: 3Pool LP (BUSD + USDC+ USDT), fUSDT LP, REN LP, DAI LP and TUSD LP. Once you lock your LP tokens into the rewards contract, you will earn EPS tokens. Every time a new block is added to the blockchain, you will see an increase in the balance that you can claim. You can now withdraw your LP tokens whenever you want and Ellipsis does not charge any deposit or withdrawal fees. So your LP tokens are not locked.
2. You can earn even more EPS by providing EPS/ BNB liquidity.
To do this you need both EPS and BNB tokens that you bundle on Pancakeswap as an LP token.
Then you go to the staking section on the Ellipsis website and deposit these LP tokens in the EPS/BNB pool. After this, you immediately earn EPS. The APY (Annual Percentage Yield) of the EPS/BNB pool is much higher than the other pools, but this naturally also increases the risk of impermanent loss.
3. Claim your acquired EPS to receive trading fees
After you’ve wagered your LP tokens, you can claim them. Doing so will create new EPS tokens that are automatically deposited into the compensation distribution contract. Once this is done, you will receive a portion of the trading fees generated by the protocol.
Since the trading costs are split equally between liquidity providers and EPS strikers, you would end up getting a share of the 50%. These fees are periodically transferred from the pools to the distributor contract and are released evenly over the next seven days.
An important thing to remember is the fact that freshly minted EPS is always considered “acquired” for 90 days. It is possible to withdraw them earlier, but if you do this you will be fined 50% for withdrawing early. After 90 days have passed, your acquired EPS will be unlocked and you will be able to withdraw it freely.
4. Stake your EPS tokens
You can also buy EPS tokens on Pancakeswap and just deposit them into the EPS stake pool. This way you will simply receive a part of the trading costs. EPS wagered in this manner can be withdrawn without paying any penalty.
5. Stake and lock in your EPS tokens to receive additional EPS from early withdrawal penalties.
Once you have EPS tokens in your wallet, you can choose to lock them within the fee distribution contract. Locked EPS cannot be withdrawn for 90 days. It is also not possible to pay a penalty for withdrawing locked EPS early.
Ellipsis Finance hopes this way to get more involvement from its users and to make them think long-term. In addition to receiving the normal trading fees, users who lock EPS will receive any penalties from users who withdraw their tokens early. You are, as it were, rewarded for your loyalty.
These fees will be re-released evenly in the seven days following a user’s early exit to pay their penalty.
6. Lock CRV (Curve) in your wallet to receive an EPS airdrop
At Curve Finance, CRV holders who lock their CRV in the Curve DAO (Decentralized Autonomous Organization) will receive veCRV tokens as a reward. The longer you lock your CRV, the more veCRV you get.
Since Ellipsis Finance and Curve Finance have entered into a mutual agreement, veCRV holders would receive 25% of the total token supply that will be broadcast weekly for more than 1 year. That is 250 million tokens that are just given to users via airdrop!
Heading Ellipsis (EPS)
On the Ellipsis website, the protocol warns its users about the potential risks. This is in contrast to other protocols where this is not done. So this is certainly a positive thing and it seems that the team wants the very best for its users. With the reliable Curve Finance as its big brother, it seems that Ellipsis Finance has a bright future ahead. We will of course only know for sure in x amount of time, but at the moment it looks hopeful and positive.
Many Curve fans will surely discover Ellipsis and its possibilities along the way and therefore also trust the protocol. To further increase that trust, we know that the Ellipsis team is supported by the Curve Finance team and also incorporates the most important core values of Curve.
Thanh Lanh Tran(1989) is Chief Editor from BitcoinUSD.com