Boosted Pools: The Future of Liquidity Provision Reimagined
Dear Friends and fellow Ludwigs,
At Beethoven X, we are on a mission to become Fantom’s most technologically advanced, highly scalable, and capital efficient AMM. With sights set, we are working harder than ever before to build industry shifting, cutting-edge DeFi products. Focused on creating long term, attractive yield, for our liquidity providers.
When evaluating the existing liquidity landscape, we foresee a challenge, but a situation that creates massive opportunity for innovation. The issue is that current APR for liquidity pairs will not be sustainable forever and all Fantom protocol’s emissions will gradually slow.
But, the great news is, we’ve engineered a solution for this scenario, both long term, and sustainable. Further, our solution will create immediate short term capital upside for liquidity providers!
Without further ado, we present to you the next chapter of Beethoven X’s liquidity provision:
Throughout this article, we will illustrate the amazing innovation of Boosted Pools, the immediate liquidity opportunities they enable and how they can shape the future of DeFi 2.0.
Let’s examine how Boosted Pools set the standard for:
- The Future of Liquidity Provision
- Enabling Traditionally Illiquid Tokens to be Used in Liquidity Pairs
- The Next Generation of LP Capital Efficiency
Now let’s queue the music…
Boosted Pools: The Future of Liquidity Provision
Most are unaware that at any given time less than 10% of the liquidity deposited into a liquidity pool is actually used to facilitate trades.
In most cases, the daily volume of trade activity is much smaller than the net sum of the pool’s total available liquidity. Thus, you have large volumes of pool liquidity sitting idly by, in a state of limbo. For liquidity providers this means a large portion of the pools staked liquidity could potentially be better utilized to earn yield.
Now, ask yourself the following:
- What if 90% of stagnant liquidity didn’t need to simply sit idle in these pools?
- What if Boosted Pools could put that idle liquidity to work maximizing capital efficiency?
- What if the future of liquidity provision incorporated interest bearing tokenomics behind the scenes?
It’s these questions that lead us to the opportunity, innovation, and the promise of Boosted Pools.
For the first time ever, Boosted Pools make it possible for the idle liquidity to be deposited into revenue generating protocols. For example, a yield aggregator like Yearn Finance. On Yearn, this idle liquidity can be put to work to generate yield for liquidity providers on top of the traditional APR already offered. Hence, “the Boost”.
In short, via pool nesting and Boosted Pools, which we will explain, 100% of liquidity can now be utilized. This maximization of capital efficiency allows Beethoven X to potentially revolutionize the future of liquidity provision.
Boosted Pools: Enabling Traditionally Illiquid Tokens to be Used in Liquidity Pairs
Recently IntroToDefi tweeted a very thought provoking question. Truthfully, it was music to our symphony composing ears!
This is spot on, as staked protocol tokens have traditionally had limited to no utilization within LP positions. Boosted Pools present the first ever solution to this problem and will incentivize liquidity for staked tokens.
Let’s use xBOO as an example.
At the time of writing this, xBOO has over $65MM in idle liquidity on SpookySwap. Until now, xBOO holders have only been able to use xBOO for single side staking, or paired with BOO in a standard 50/50 pool (as seen on Solidex). Now, with Boosted Pools, users have the ability to enter into LP positions utilizing both Boo and xBOO. Unique to Beethoven, our BOO/xBOO pool composition still maintains an 80/20 weighted structure, easing impermanent loss concerns.
Furthermore, BOO/xBOO can also now be paired with other potential interest bearing tokens like wFTM or USDC. Thus, LP providers can maintain xBOO’s tokenomic benefits, while also putting xBOO’s previously unusable liquidity to work within an LP pair.
Summarizing Liquidity Provider Benefits:
- Holders can put 100% of your BOO/xBOO capital to work.
- LP providers can increase the size of your LP position with liquidity tokens that were previously illiquid in traditional LPs.
- LP providers will now capture the BOO/xBOO trading volatility in the form of swap fees.
- Holders continue to benefit from the xBOO deflationary tokenomic appreciation.
- Impermanent loss is eased via Beethoven’s 80/20 weighted pool composition.
Believe it or not, these are only the initial benefits of Boosted Pools!
Additionally, Boosted Pools will utilize Yearn Finance interest bearing tokens, like yvFTM. In this scenario, you can pair BOO/xBOO with wFTM. The wFTM is then automatically converted to yvFTM. This yvFTM is then staked in Yearn vaults where it can compound interest and make use of stagnant wFTM liquidity in the pool.
This means now LP providers can receive an omnipresent “passive boost” from all wFTM within the liquidity pool. Effectively, 100% of the pool’s liquidity will be put to work. All assets within the liquidity pair are earning some form of interest, plus swap fees!
This is the future of maximal liquidity provision in DeFi 2.0. Thanks to the Balancer V2 AMM technology, Beethoven X will truly set itself apart from other AMMs on Fantom via Boosted Pools.
Overture Grim In The Mirrorworld is the first ever Boosted Pool created of this kind and is now live on Beethoven X. Though the pool is not yet fully boosted, we expect an increase in APR as we continue our Boosted Pool transition. The magnitude of opportunity for Boosted Pools cannot be overstated.
Boosted Pools: The Next Generation of LP Capital Efficiency
As mentioned, traditional liquidity provision mechanics utilized by standard AMMs, Uni V2 forks, do not make use of all available capital in a given pool. Thus, unused capital equates to capital inefficiency.
Built on Balancer V2 AMM technology, Boosted Pools allow us to create an innovative solution to put this traditionally unused capital to work. This functionality has three core pillars that, when combined, not only create the makeup of a boosted pool, but also provide the framework allowing this pool type to redefine how we use liquidity in DeFi.
The Three Core Pillars:
- Linear Pools
- Nesting Pools
- Phantom BPTs
A linear pool is a new pool type designed to hold a main token (DAI), and ideally, an interest bearing token (yvDAI). If we assume at any given time the pool is holding the 10% of liquidity needed daily, then this means the remaining 90% of the unused liquidity can be wrapped and become an interest bearing asset. In this DAI example, the interest bearing asset would be known as yearn vault DAI or yvDAI.
The alpha here is, we have a massive portion of previously unused DAI, wrapped and sent to Yearn, now earning interest from Yearn Finance vaults. This innovation creates new sustainable yield opportunities that maximize capital efficiency in liquidity pools.
Additionally, Linear Pools can be nested together to form the basic structure of the Boosted Pool. Through the process of nesting, a pathway is created to facilitate trades between a token pair with highly concentrated, superfluid liquidity. More specifically, nesting pools means Beethoven X no longer needs to have a specific token mapped to a stable token for each individual liquidity pool. Shown below, is how traditional UNI V2 AMM’s approach liquidity pairs with stable tokens.
Before nested pools:
Instead, via nesting, we construct a master pool (Stable USD Pool), that can efficiently trade between all of the tokens types contained within the nested linear pool (Ex. USDC / DAI ). This singular master pool, Stable USD, can be mapped to any liquidity pool created.
This is the most sophisticated, interconnected mechanism for “next level” liquidity efficiency. Linear pool nesting should result in the deepest stable liquidity pool in the ecosystem and streamline all new pool creation on the platform.
After nested pools:
- FTM / Stable USD Pool (USDC / DAI )
Finally, on pool entries and exits, Boosted Pools leverage functionality called Phantom BPTs. This means the pool utilizes a swap rather than a mint/burn mechanism. This is a faster, more gas efficient process and significantly reduces the cost of issuing/reclaiming BPTs for liquidity providers. Requiring less gas per transaction means even greater capital efficiencies in the form of transaction cost savings.
Summarizing Liquidity Provider Benefits:
- All the liquidity in a pool can be wrapped to create interest bearing assets
- Stables like DAI/USDC can be nested for the deepest liquidity concentration created by any Fantom AMM
- New pool creation is seamless as Nested Stables BPTs can be mapped to any new or existing pools
- 2 token LPs can functionally now contain 3 tokens, wFTM + yvUSDC/yvDAI, with minimal slippage
- Users spend less on gas upon entry and exit of the pool
Our Steady Beets, Yearn Boosted pool is an example of this nested stable pool in action.
Ultimately, maximization of capital efficiency means utilizing 100% of a pool’s available liquidity, while earning new passive forms of APR interest, on top of capturing the traditionally offered APR. Our goal is to ensure every token in an LP pair serves a purpose, either earning interest or enabling new token utilizations for the liquidity providers.
Beethoven X plans to utilize Boosted Pool and their three internal core pillars to become the future of AMMs in DeFi 2.0.
With Boosted Pools, Beethoven X is revolutionizing the future of liquidity. For the first time ever, staked tokens will be utilized in liquidity pairs, unlocking a massive volume of existing ecosystem liquidity ripe for deployment! We’ve maximized capital efficiency through linear and nested pools and put 100% of available liquidity pool capital to work. Further, we’ve created new additional layers of APR for liquidity providers via utilization of wrapped interest bearing tokens. But, we are also thinking about things even more long term.
The enablement of multi-token liquidity pairs that earn sustainable passive interest ensures we have a roadmap for long term protocol growth. Of equal importance, our users have a roadmap for the long term maximization of their investment success as well.
Amazingly, the scope of innovation we have achieved with Boosted Pools thus far, barely scratches the surface in terms of their potential. Since their conception, we’ve already iterated a new use case in BOO/xBOO, and we are certain additional use cases will evolve rapidly. Thus, Boosted Pools are already changing the face of DeFi as we know it, however, this is truly just the tip of the iceberg.
Progressing into the future with Boosted Pools we plan to:
- Expand our token options supported in Boosted Pools (FTM, BOO, ETH, BTC)
- Enable new staked tokens to be used for LP pairs, similar to how xBOO can now be utilized
- Enable more protocols to use Boosted Pools as base layer for their LPs
- Create new opportunities for users to benefit from market volatility via LPs compatible with staked tokens
- Become a vacuum of TVL within the $FTM ecosystem
- Open the door for new AMMs to build on top of our latest technology, faster and cheaper than ever before
We believe the first steps towards the mass adoption of Boosted Pools are awareness and education. Over the coming months we will do our very best to provide more educational content around the benefits of Boosted Pools and highlight why they are so unbelievably awesome.
We hope that you found this article insightful and exciting. Beethoven’s future is primed for innovation and Boosted Pools are only the beginning.
If you would like to stay up to date with everything that is going on at Beethoven X and get more involved with all music, we have an incredible community on our Discord.
Disclaimer: The information in this article is for educational purposes only and is NOT intended as financial advice. Beethoven X will not be liable for any Investment/Trading activity of users.