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Mechs: reminder to join us for our latest State of the Reactor (aka community call), today in the discord at 8:30 UST/3:30 EST, to get a little insight into some upcoming Tokemak updates.☢️
discord.gg/tokemak
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20/20 Disclaimer: This analysis is based on assumptions specific to Tokemak and is not investment advice, nor should be used as a guideline for liquidity provision on AMMs.
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19/ For further info on this analysis feel free to listen to the discussion below
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18/ Future Work
Besides the completed preliminary backtests that verified this model's accuracy, it's necessary to conduct historical backtesting and test additional Curve V2 configurations.
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17/ For this purpose, Curve V2 provides the required flexibility to tailor pools for specific token/pairs through its dynamic fees based on volatility and adjustable admin fees.
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16/ Conclusion
During high-volatility environments, all AMMs included in this analysis will incur losses (unless trading fees offset loss due to price fluctuations). The goal is to optimize for low-volatility periods while protecting against downside during high-volatility ones
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15/ Price Flat Scenario: 40-60% Sell Volume
Normalizing UniV2 and Balancer fee rates to 1%, Curve V2 has the best performance in the non-competitive scenario while UniV2 has the best performance in the competitive one. As prev mentioned, this AMM configuration is not possible.
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14/ Price Flat Scenario: 40-60% Sell Volume
In both the non-competitive and competitive simulations, Curve V2 has the best performance (driven by higher fees), followed by UniV2, and Balancer. Furthermore, this scenario has an average price change of +2%.
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13/ Price Down Scenario: 65-85% Sell Volume
For this scenario, all AMMs lose money with the volume that was simulated. Additionally, there is an average 50-60% price decline across all simulations.
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12/ Price Down Scenario: 65-85% Sell Volume
Normalizing UniV2 and Balancer fee rates to 1% (to adjust to Curve's higher fee rate), the results remain similar. It's worth noting that UniV2 has a 0.3% fixed fee that renders this state impossible, and Balancer has a 50% admin fee
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11/ Price Down Scenario: 65-85% Sell Volume
In the competitive simulation, Balancer has the best performance (because it isn't the price discovery pool), followed by Curve V2, and UniV2.
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10/ Price Down Scenario: 65-85% Sell Volume
In the non-competitive simulation, Curve V2 has the best performance in terms of total return, followed by UniV2, and Balancer. Given that volume is fixed in the simulations, Balancer discovers a lower price due to its higher slippage
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9/
a) Non-Competitive - equal starting TVL per AMM, simulated in isolation with an identical sequence of trades;
b) Competitive - Same TVL spread evenly across the three AMMs, trades routed/split for best execution;
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8/ Simulation structure:
- Tokens start at 1:1 exchange price and set TVL;
- 100 simulations per scenario (random sequence of 1,000 trades each);
- No liquidity added or removed during scenarios
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7/ Furthermore, the following standard AMM configurations were considered:
a) Uniswap V2 - 50/50 pool with a 0.3% fee;
b) Balancer - 80/20 pool with a 0.3% fee;
c) Curve V2 - Slightly higher convexity than the standard 50/50 pool, and a variable fee from 0.25% to 2%;
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6/ The key metrics used in this analysis were the following:
a) Total Return (fee return and IL)
b) Fee Return
c) Pool Turnover
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5/ Competitive simulations assume that the swap volume is split across the three AMMs (with a combined depth of a single AMM in the non-competitive simulation) to achieve the optimal swap price. For this purpose, gas fees are taken into account when splitting transactions.
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4/ Non-Competitive simulations assume that the entire swap volume is handled by a single AMM, each with the same total depth.
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3/ For this purpose, the approach used was the following:
a) Development of internal models for each AMM under analysis
b) Generation of swap data that emulates target tokens for three scenarios - price up, flat, and down
c) Non-Competitive and Competitive simulations
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2/ The purpose of this analysis is to assess potential performance benefits from using alternative AMMs, specifically Curve V2 and Balancer. Performance depends on (inter alia): volatility, expected trading volume, and presence and configuration of other AMMs (market competition)
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Summary on Tokemak’s AMM Analysis for Curve V2, Balancer 80/20, and Uniswap V2 (focused on passive AMMs, as active models cannot be directly compared).
As an LP protocol, it's important for Tokemak to understand the current AMM designs’ impact on LP positions.
🧵(1/20)
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The accTOKE cap has been raised to 3M TOKE, live now on tokemak.xyz In other news, SETI decrypted another deep space transmission now known as Smuggler Radio: tokemak.radio
Click the sunglasses skull for SR, here’s a clip:
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Cycle 242 has officially commenced and the accTOKE cap has been raised to 2M TOKE at tokemak.xyz.☢️
To read more about accTOKE, see the updated docs here: docs.tokemak.xyz/toke/acctoke
GIF
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accTOKE has already reached capacity for Cycle 241☢️
The cap will increase at the start of Cycle 242
GIF
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accTOKE is now live at app.tokemak.xyz
The first cap for Cycle 241 is 1,000,000 TOKE ☢️
Current LDs can migrate directly into accTOKE without unstaking, if they so choose.
For more info on accTOKE, review yesterday's article here:
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Attn Tokemechs: all systems are go for accTOKE and system rewards logic update. Tomorrow.☢️
Read more here:
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Pilots: quick reminder that tomorrow's State of the Reactor call (at 8:30PM UTC) will feature a performance analysis of LPing on Curve v2, Balancer v2, and Uniswap v2. This SotR will take place in a voice channel, not the regular stage channel. Be there.☢️
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Both and did not take any investments from FTX/Alameda, and do not have any FTT exposure or any funds on FTX.
Sending positive thoughts to everyone impacted by FTX. Terrible week for our industry. Hang in there. 🙏
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In prep for reward system updates, TOKE LD voting is now available only to Token Reactors! Head to tokemak.xyz migrate any TOKE votes from Pair to Token Reactors to continue earning rewards. Move your votes by next Wednesday at approximately 8 am PT (before Cycle 236)
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Pilots - reminder to hop in discord at 8:30pm UTC (4:30pm EST, 1:30pm PST) for our State of the Reactor community call. Tune in via our Discord comms stage channel. Link:
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𝗪𝗲'𝗿𝗲 𝗵𝗲𝗿𝗲. 𝗪𝗲'𝗿𝗲 𝗯𝘂𝗶𝗹𝗱𝗶𝗻𝗴.
GIF
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7️⃣ Tokemak will begin with a safeguarded launch, meaning staking will be capped to a predetermined maximum quantity of TOKE - the cap being raised periodically. This will allow for an orderly & controlled transition into the mechanics. Details regarding the safe launch to follow.
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6️⃣ accTOKE creates opportunity for two distinct user groups: agnostic LDs that wish to capture the POA rewards, and LDs that wish to actively control Reactor deployments – providing a simpler and more efficient way to interact with the protocol.
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5️⃣ The locking periods are based on the Tokemak deployment cycles. The desired period can be set by the user and is a factor in determining the staking rewards. Initially, locking periods will be of shorter duration, with planned durations at launch ranging from 2-8 weeks.
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4️⃣ Rewards from regular LP deployments continue to accrue to the DAO treasury, compounding into POA deployments (and compounding accTOKE rewards).
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2️⃣ accTOKE stakers will be able to control parameters of the accTOKE POA deployments.
3️⃣ Liquidity Providers (LP) and Liquidity Directors (LD), who are not staked into the new accTOKE mechanism, will continue to receive TOKE rewards for their respective actions in the system.
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