Categories
DeFi tools Dev updates Events

Falcon- InstaDEX public Testnet release

Instaraise is beyond thrilled to release the Pubic testnet version of our Decentralised exchange on Tezos. Falcon has just landed on earth and anyone from Tezos community can now experience the new innovation that has come in Tezos DeFi ecosystem.

Falcon is the public testnet version of our upcoming InstaDEX which is the closest to the mainnet version of the DEX.

We proudly present the Tezos community our Public testnet version of InstaDEX which is packed with features that are never seen before in Tezos Defi.

  • The Impermanent loss protection in InstaDEX, will ensure that the community is encouraged for their efforts and not penalized by forcing them to accept impermanent loss under volatile market conditions.
  • Single asset liquidity provisioning will attract more liquidity into Tezos DeFi ecosystems allowing LPs to make greater sums. As liquidity increases, users across DeFi protocols can swap for needed tokens easily with no worries of slippage and interact with plenty more use cases and applications.

Dive deep into the inspiration and technical aspect of InstaDEX.

InstaDEX Lightpaper ➡️https://docsend.com/view/xag2x6m7t7ehi5vy

InstaDEX Overview➡️https://blog.instaraise.io/introducing-instadex/

At Instaraise, the security of our users is our number one priority. As such, we strive to provide the most secure platform possible.

Although our Devs are doing their best to find every possible vulnerability on our platform, there is always a slight possibility that a few of them could have been overlooked. Thus, we decided to introduce a bug bounty program.

Any Tezos community member can take part in the program and earn rewards by reporting the bugs they find in our public testnet version of our DEX.

Falcon Bug Bounty program

This section will give you an overview of the InstaDEX Bug Bounty Program. Please make sure you keep the ruleset in mind before investigating any issues

We will evaluate reported security issues based on the security impact to our users and the Instaraise ecosystem.

As a Bounty hunter, you will also be the early adopters of InstaDEX and a part of the Instaraise’s effort to improve Tezos DeFi. In this program you will be helping us in testing ins and outs of the DEX.

Eligibility

Since this is a public event, anyone who is willing and interested to help in building and bringing new innovation to Tezos Defi is welcome to come forward and help us on the same journey.

Scope

Our DEX has 4 main features that will be your focal points while testing which are:

Swap, Tokens, Liquidity and Faucet.

As a Bug hunter, you will be required to test Skywalker and hunt down any bugs or security concerns that might be critical for the development of the DEX

Apart from this, you are welcomed to provide your valuable suggestions and ideas that can further improve DEX functionalities. Your suggestions and feedbacks can range from UI/UX improvements, your experience with the whole DEX etc.

How to begin?

To kickstart with the testing of our DEX please visit:

 ➡️ alpha.instaraise.io

Load the testing tokens to your wallet with the Ghostnet Network via our Faucet feature. You can refer to this Video for reference: faucet

Your main objective post loading the tokens will be to test out the Swap Tokens and Liquidity features in our DEX.

(Don’t forget to toggle the Day/Night mode of the website according to your convenience)

Rewards

Total 5 winners will be selected on the basis of the criticality and the vulnerability of InstaDEX due to the bug. All the winners will share prize pool of 2000$ worth of XTZ equally ($400 each)

The distribution of the rewards will be done right after the Mainnet launch of InstaDEX

Bug Reporting

Submitting the bugs and feedbacks is as easy as posting a tweet!

After testing the ins and outs of the Falcon, you can report the bug or your feedback by simply sharing them via individual tweets or a tweet thread on Twitter with proper screenshots/videos supporting your report.

If, anyhow you are unable to find any bugs, you can even share your review about the Falcon via tweet which will be equally significant.

Make sure that you tag “@instaraise” in your tweet along with the hashtag #InstaDex and #Tezos for us to find your tweet easily.

TIP- The more elaborated and well explained is your tweet, the higher is your chance of winning!

For any other queries related to the program, contact us directly on the Instaraise official telegram community channel where our admins are always ready to help you.

Criteria for Rewards

Winners will be selected on the basis of

  • The criticality of the bugs and issues found out during your testing
  • Significance of your feedbacks for the development of the DEX
  • The level of deep testing done by the testers which will be interpreted by the quality of your bug and feedback tweets

Good luck, happy testing and many thanks to you all for ensuring that our DEX goes out smoothly with all the best of feedbacks and suggestions incorporated.

Categories
DeFi tools Research

Impermanent Loss in DeFi- How Liquidity Providers Can Avoid It

Financial instruments exist to help individuals and institutions save, manage, and grow their assets. Yet many investors find themselves unhappy or lacking motivation to indulge in most of the traditional asset classes due to a variety of reasons, some of which includes issues with accessibility, associated costs and regulatory red tapes, large ticket sizes combined with low returns and more. All these factors have led them on a search for attractive alternatives, conveniently offered by DeFi.

Evolving from the technology underlying Bitcoin, followed by the introduction of the first ever programmable blockchain in the form of Ethereum, DeFi is the application of the very technology to create financial solutions. DeFi, short for Decentralized Finance, now provides a viable alternative to highly centralized traditional financial systems.

DEXs in DeFi

Powered by crypto assets, the applications of DeFi range from simple exchange/swap solutions to lending, insurance, and other yield generation instruments. It is open for everyone to participate, enabling them to invest and generate returns without the hurdles faced in traditional finance. In most DeFi instruments, users are always in control of their funds and play a crucial role in ensuring continued operation of these solutions.

Decentralized Exchanges – DEXs, play a pivotal role in the DeFi ecosystem. Its importance is underlined by their presence in native form on each of the many blockchain protocols out there. Apart from allowing users to exchange one crypto asset to another, they also pave the way for various other DeFi activities like staking and yield farming.

Liquidity Provisioning on DEX

For an exchange platform to operate, they need to have liquidity in the form of tokens for each crypto pair they support. Centralized exchanges maintain a huge liquidity pool composed of user deposits along with their own funds that enables uninterrupted exchanges and trades. However, in a decentralized context, there is no centralized pool. Instead, they rely on the community members providing liquidity by depositing their holdings into respective liquidity pools, in exchange for rewards.

Such a model, automated by smart contracts is known as Automated Market Maker model and the DEXs are called AMM DEXs. Few examples of AMM DEXs on different protocols include Uniswap on Ethereum, QuickSwap on Polygon, QuipuSwap and InstaDEX on Tezos and so on.

As Liquidity Providers (LPs), community members stake their crypto assets, usually in pairs, into the liquidity pools present in automated market maker (AMM) DEXs. Other users looking to exchange their assets can select the relevant token pair listed on the platform and deposit one of tokens into the smart contract to receive an equivalent value of another into their wallets to complete the swap process.

The deposited token gets added to the liquidity pool to affect the withdrawal and transfer of the other token from the same pool.

For their contribution to the ecosystem, LPs receive a portion of the transaction fees on swaps charged by the platform from its users as rewards. Sometimes, the LP tokens received by liquidity providers as a confirmation of their contribution to the pool can be deposited in certain DeFi farms to earn additional rewards.

While liquidity provisioning acts as an attractive passive crypto income generating activity, it is also associated with risks that could lead to LPs losing large sums of value, like rug pulls, flash loan attacks and impermanent loss- the latter of which can be avoided or mitigated with the right information.

The saying “the greater the risk, the greater the reward” applies even more for a segment as volatile as cryptocurrency but a smart investor usually works around the risks present to make steady profits in the long run.

What is Impermanent Loss in DeFi?

Impermanent Loss is an unrealized loss that LPs only notice upon withdrawing their asset pairs from liquidity pools. It refers to a reduction in the dollar value of these staked assets as compared to their dollar value if the LPs just held on to them. By deciding to not withdraw their assets and wait it out instead, there’s a chance that the loss could correct itself- hence named ‘impermanent’.

How Impermanent Loss Occurs, With an Example

It would obviously make more sense to explain such a technical concept with an example that will aid in understanding better.

Let us say, a liquidity provider, LP1 decides to provide liquidity to a 50:50 ETH/DAI pool on Uniswap. The person stakes 10 ETH at a price of $1000 per token and an equivalent value of 10,000 DAI to secure a 10% stake in the pool containing a total of 100 ETH and 100,000 DAI.  Following LP1’s contribution, a user decides to swap 50,000 DAI to 50 ETH from the pool. Following the swap, the liquidity pool will have 50 ETH and 150,000 DAI.

Meanwhile, let us assume an increased demand for ETH in the market drives its value by 2x to $2000 per tokens. At this time, if LP1 were to withdraw their staked assets, which is 10% of the pool value at that moment, they will receive 5 ETH and 15,000 DAI valued in total at $25,000.

If the person had held on to the assets without contributing to the pool, it would have been worth $30,000 ($20,000 in ETH and $10,00 in DAI). By contributing and withdrawing from the liquidity pool, LP1 experienced an effective impermanent loss of $5,000.

Those who provide liquidity for highly volatile assets are at a higher risk of losing value due to the occurrence of this phenomenon. However, by keeping in mind a handful of suggestions and playing it smart they can prevent the loss of any value or at least minimize it.

Ways to Avoid Impermanent Loss

Liquidity providers can make use of multiple options provided by DeFi platforms to minimize the magnitude as well as risks of impermanent losses. Some of the tried and tested strategies include participation in yield farming, providing liquidity for stablecoin pairs or low-volatility pairs, opting for flexible pool ratios and single asset liquidity provisioning.

Yield Farming

The best form of defense is offense and LPs can be on the lookout for farming programs offered by the same protocols offering the liquidity pools. By farming the proceeds received from the pools, they can bag considerable yields that are often large enough to offset impermanent losses whose occurrence can sometimes be inevitable. A risky strategy, it is something that seasoned investors should give a try.

Stablecoin Pairs

For those wanting to play it safe, staking stablecoin pairs is the way to go. As the name suggests, the value of stablecoins remains mostly constant albeit for minor fluctuations at times. The absence of volatility with such token pairs makes the chances of dealing with impermanent loss quite low (very slight fluctuations in the value of these coins do occur sometimes).

As the least risky way to provide liquidity, one can expect to earn profits from trading fees depending on the demand for these tokens.

Low Volatility Pairs

The returns on liquidity provisioning for stablecoin pairs may be on the lower end and the next best alternative is participation in pools consisting of low-volatility crypto pairs. At a slightly elevated risk potential, users can stake their assets in such pools being assured of minor price variations between each other. They can choose to invest in those pairs that exhibit similar price fluctuations, in the same direction to evade potential losses.

Flexible Pool Ratios

For those with a greater risk appetite and keen on providing liquidity for assets that are on the more volatile side, liquidity pools that offer flexible ratios balance out the risk. Pools in popular AMM DEXs like Uniswap follow the 50:50 ratio and keep the total value of the pool constant using algorithms. However, such ratios are known to cause impermanent losses frequently.

Instead, pools where one asset has a huge weightage as compared to the other reduces and can prevent such losses. For example, certain DEXs consist of popular pools that allow users to stake token pairs at 80:20, or even 98:2 ratio. re of the ratio 80:20 or even 98:2. Any impermanent loss experienced is minimal and can be easily offset by transaction fees.

Single Sided Liquidity Pools

Pools with flexible ratios like 98:2 prevent users from facing greater exposure to the volatility of two different assets at the same time. A new breed of DEXs led by Bancor – the first protocol to deploy the AMM algorithm providing for single sided liquidity pools, followed closely by InstaDEX on Tezos ecosystem take liquidity provisioning to the next level by allowing LPs to stake and maintain complete exposure to one single asset.

Such protocols also offer protection from the impermanent loss incurred with single asset liquidity provision- a great incentive to provide liquidity to the platform. Therefore, LPs can hold their assets in the pool for long periods of time, generating passive returns in the form of trading fees, staking rewards, and compounding yields.

Investing in Single Sided Liquidity Pools

Liquidity providers can begin to invest in single sided liquidity pools by staking a volatile asset. Meanwhile, as a market maker, the protocol or other users co-invests an equivalent amount of its native tokens and charges fees on its stake until the LP withdraws their asset at which point the co-invested tokens are burnt.

The fee collected is used by the protocol to cover any impermanent loss that LPs face in these pools. Moreover, LPs can also stake these native tokens that they own on the other side of the single asset provision pools. These tokens replace those staked by the protocol which are burnt.

Single Asset Liquidity provisioning pools on InstaDEX– the first platform on the Tezos blockchain to offer Bancor like features allows users to stake any asset of their choice on the relevant liquidity pool for efficient utilisation of the user’s portfolio.

Further, the impermanent loss protection insurance offered by InstaDEX covers LPs from potential impermanent losses after a minimum staking period of 100 days. The insurance fills the difference in value of assets in case of impermanent losses during the time of withdrawal to ensure the LP doesn’t lose any value by contributing to the ecosystem.

Conclusion

Impermanent loss is a by-product of all the advantages offered by DeFi. In the existing conventional AMM structure, it may be unavoidable, but there are always options available for consideration to minimize or overcome it.

With InstaDEX, Instaraise has devised single asset staking and impermanent loss protection insurance as a way to ensure the community is encouraged for their efforts and not penalized by forcing them to accept impermanent loss under volatile market conditions.

Categories
Dev updates

InstaDex Private Testnet V1 “Skywalker”- Participate Now!

Instaraise team is thrilled to inform the whole Tezos community that the ”Skywalker” (InstaDex version 1.0) is now live on Testnet. This update signifies our hard work and the commitment towards our mission of building a Defi universe on Tezos.

InstaDex is going to be the first “Single asset liquidity provisioning” DEX on Tezos.

With InstaDex, we aim to solve the problem of Involuntary Token Exposure and Impermanent Loss by creating a system where INSTA holders i.e the liquidity providers will not only manage the risk, but also participate in the upside via swap fees collected by the protocol.

By diversifying the risk of impermanent loss across a wide array of pools, we could potentially deploy a system where the revenue from swap fees exceeds the network-wide cost of Impermanent loss insurance.

Skywalker Beta tester program

Tezos has always been an ecosystem of a highly talented crowd of developers, artists and crypto lovers who collectively work towards the upliftment of the whole ecosystem.

As InstaDex is built for the community, what’s better than every member contributing towards building the First DEX on tezos with impermanent loss protection?

Therefore, we introduce you to Skywalker Beta tester program with an aim to build together on Tezos

To apply for the program, signup by filling a small form given below
➡️ https://bit.ly/SkywalkerBetaTesterApplication

We hereby call upon all developers to help join our team to further develop the InstaDex which will ensure that we develop a product that the community truly loves. The tez army in the Beta tester program will be working closely with the Instaraise team to test the Skywalker version of InstaDex and be instrumental for the success of the same.

What’s in it for the Beta testers?

The Beta testers in the Skywalker Beta testing program will be entitled to various perks and opportunities that will be coming soon during our Public testnet release and Mainnet launch. Few of them will include

  • Work with highly skilled developers and test the private ‘Skywalker” version of InstaDex before anyone else
  • A reward pool of $2,000 worth XTZ token will be airdropped to our top 5 Beta testers on the mainnet launch (Read section “Rewards distribution” to know more)
  • A chance to be seen by the wide Tezos and crypto community for sharing your views and opinions on our DEX which will also help you in ensuring brand value and exposure to many bigwigs in the industry.
  • Beta testers can also become the early liquidity provider on InstaDex and earn Tx fees
  • Exclusive access to upcoming Instaraise events

Your role as a Beta tester

The Beta testers will be the first one to get exclusive access to InstaDex private testnet “Skywalker” and will be able to play around with the testnet before anyone else.

As a tester, you will be required to test Skywalker and hunt down any bugs or security concerns that might be critical for the development of the DEX

Apart from this, you are welcomed to provide your valuable suggestions and ideas that can further improve DEX functionalities.

How to apply for the program?

Fill out the small form below to apply for the Skywalker Beta testing program.

➡️ https://bit.ly/SkywalkerBetaTesterApplication

Submitting your feedbacks

Submitting the feedbacks, bugs and suggestions is as easy as posting a tweet!

While testing the ins and outs of the Skywalker, you can provide feedback and suggestions by simply sharing them via individual tweets or a tweet thread on Twitter with proper screenshots/videos supporting your feedbacks.

If, anyhow you are unable to find any bugs, you can even share your review about the Skywalker via tweet which will be equally significant.

Make sure that you tag “@instaraise” in your tweet along with the hashtag “#InstaDex” for us to find your tweet easily.

TIP- The more elaborated and well explained is your tweet, the higher is your chance of winning!

For any other queries related to the program, contact us directly on the Instaraise official telegram community channel where our admins are always ready to help you.

Reward distribution

This Beta tester program will consist of 20 individual Beta testers who will testing the ins and outs of the Skywalker. However! to spice things up, only 5 winners will be selected out of those who will share $2,000 worth of reward pool of XTZ equally.

Winners will be selected on the basis of

  • The criticality of the bugs and issues found out during your testing
  • Significance of your suggestions for the development of the DEX
  • The level of deep testing done by the testers which will be interpreted by the quality of your feedback and suggestion tweets

Result Announcement

The results announcement and airdrop for the private beta tester program winner will be done soon at the time of InstaDex mainnet launch!

Join our Instaraise community channel for instant updates about the program and upcoming developments➡️  https://t.me/Instaraise