Brought to you by the iYield Team, in this update we are going to be taking a look at our proprietary Automated Market Maker integrated directly into the Yield Bank platform as well as an explanation of our Send It feature that will make the Yield Banker platform more inclusive and user-friendly than any other project on the market, ultimately achieving our goal of bringing the average crypto user unfamiliar with DeFi into the DeFi space through our platform.
Automated Market Makers (AMMs)
Let us quickly refresh our memory on AMMs, what they are and what they do.
AMM is a type of decentralized exchange where you interact with a smart contract which is tapped into a liquidity pool.
An AMM works similarly to a centralized exchange in that there are still trading pairs, for example ETH/USDC. However, as stated above, the trade is executed based on an interaction with a smart contract deployed on the Ethereum network. In the case of the ETH/USDC example, you would send a selected amount of funds, let’s say USDC, to this contract, and the contract dictates how much of ETH you get back in return. The contract dictates how much exactly are you getting and it does this autonomously based on a mathematic formula. For the sake of simplicity, we should focus on the “constant product” formula which is the formula Uniswap uses.
x * y = k
x is the supply of the first token in the trading pair
y is the supply of the second token in the trading pair
k is called product or constant product
It is important to note that the “supply” of x and y refers to the supply of tokens in that respective liquidity pool of that associated trading pair, not the total or circulating supply of the token.
After each trade, Uniswap adjusts the price based on how much the trade size shifts the x:y ratio where k stays constant. This x:y ratio will always dictate the exchange rate, i.e. the price between the two assets in a given trading pair. This formula ensures that big trades (relative to the liquidity pool’s reserves) execute at exponentially worse rates than smaller ones.
Yield Bank’s Automated Market Maker
We aim to create an Automated Market Maker (AMM for short from now on) to integrate into our platform that would essentially allow users to tap into the entirety of DeFi through a simple, easy to navigate interface.
Through Yield Bank’s AMM you will be able to access various DeFi liquidity focused protocols starting with the biggest ones — Uniswap, Balancer and Bancor.
In addition to liquidity pools of the most common protocols, Yield Bank’s AMM will add liquidity from all liquidity positions to our own liquidity pools supported by our protocol. Each liquidity addition will harbor a default 5% of the liquidity added to our own platform pools. For example, if a user is applying $500 of liquidity to an Uniswap ETH-DAI pool, 95% of the user’s liquidity will be sent to Uniswap ETH-DAI pool and 5% to Yield Bank’s ETH-DAI pool. Rewards for this liquidity will be issued in the yCASH token in the amount of 0.05% of the pool’s volume in transactions. The user can override the set standard liquidity portion contribution and add more or all of the liquidity directly to Yield Bank’s pools to be rewarded more yCASH and capture a greater share of the pool’s generated fees. Further, all liquidity provider’s portions of liquidity added to our pools will automatically be given from this percentage. This provision will help ensure the growth of Yield Bank’s liquidity pools and maintain the whitepaper vision of mass locked liquidity pools to utilize.
Individual Account Propriety applied to external protocols
This works perfectly in tandem with our Individual Account Propriety (IAP for short from now on) which is a database layer on top of the Ethereum network for our Yield Bank platform. What the database does is simply read data from a blockchain explorer such as etherscan and give you a full breakdown of your finances in a concise, easy to read statement based on your pegged Yield Bank account number, similar to a statement generated off of a traditional bank account. These statements will show balances, gains, gas fees, transaction fees, where your assets are allocated and more. As a result, when interacting with any protocol integrated into our AMM through Yield Bank, you will be able to track your portfolio’s history in a much more convenient and concise manner than ever before.
Liquidity pools simplified and made more accessible
Through the Yield Bank’s AMM users will be able to enter and exit Liquidity Pools — not just the proprietary liquidity pools of Yield Bank, but any liquidity pools within any major protocol in the space.
Through simple one-click features, you can simply select the liquidity pool of your choice and our AMM will route your money into that pool without ever having to leave the Yield Bank platform.
The most seamless DeFi experience for swapping assets through a single platform
Much like accessing a wide variety of liquidity pools through our platform’s AMM, we will also allow our users to swap assets through our platform’s interface — thanks to our implementation of various protocols into our AMM (courtesy of their SDKs and open source code), you will be able to trade assets and tap into other decentralized exchanges without ever having to leave our platform.
For example: let’s say you have a single asset, ETH, that you are staking on a platform. Instead of ETH you now want to stake DAI in a different pool on a different protocol. What would happen traditionally is that you would go to the platform where you are staking your ETH, unstake the ETH, take that ETH to an exchange (centralized or decentralized), exchange the ETH for DAI, take that DAI back to the new platform and stake it there.
Yield Bank’s AMM allows the users to exchange assets without ever having to leave the platform, thus saving you time, money on gas and reducing room for error (such as sending your funds to the wrong address). Simply unstake, swap assets inside our UI through our AMM and stake the new asset instead.
Our “Send It” App inside the Yield Bank platform will serve a similar purpose of providing a seamless experience. Send It is a way of interacting with your wallet connected to the Yield Bank platform. Through Send It you will be able to issue regular transfers of funds like you would using Metamask, but instead you are issuing commands to your wallet through our aesthetically pleasing, easy to understand UI. This makes for a more immersive platform and engaging experience with the feel more akin to a professionally developed software-like experience instead of having to interact with a janky website or a web portal.
Onboarding users through the Send It App
When we say we are aiming for mass adoption and the number one spot in DeFi, we mean it.
Users coming into our platform not owning any cryptocurrency will be able to be onboarded with a simple purchase of ETH using a credit card, a debit card or a checking account (KYC might be required for checking accounts specifically). Users are then directed to buy the yB token to access the platform, and can start their crypto journey from that point onwards — we have designed the platform with this in mind, Yield Bank is made to be as intuitive as possible.
The iYield Team, all of our development and management wishes to thank our community for the continued support and interest.
We want to wish everyone Merry Christmas, a Happy New Year and above all strength and health going into 2021 which can hopefully be a better year than 2020 was.
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The article and any other associated content of Yield Bank does not constitute as financial advice. Cryptocurrencies are a high risk investment and may not be suitable for all members of the public and all types of investors. This is an experiment in DeFi yield aggregating to bring longer and steadier yields to its users.
Next article coming up: Yield Bank’s Suite of Apps
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Liquidity Episode date: 18th January 2021