Out of all DeFi innovation, nothing excites me more than @InfPools.
Let me show you how to achieve unlimited leverage on ALL assets. Liquidation free.
🧵
Let me show you how to achieve unlimited leverage on ALL assets. Liquidation free.
🧵
This thread will cover
1️⃣ Uni V3 Recap
2️⃣ Onchain Leverage
3️⃣ Uni V3 Leverage Benefits
4️⃣ Inf Pools Basics
5️⃣ Protocol Architecture
6️⃣ Leverage Process Flow
7️⃣ Fees & Interest
8️⃣ Payoffs
9️⃣ Final Thoughts
You will understand InfPools better than 99% of CT after reading
1️⃣ Uni V3 Recap
2️⃣ Onchain Leverage
3️⃣ Uni V3 Leverage Benefits
4️⃣ Inf Pools Basics
5️⃣ Protocol Architecture
6️⃣ Leverage Process Flow
7️⃣ Fees & Interest
8️⃣ Payoffs
9️⃣ Final Thoughts
You will understand InfPools better than 99% of CT after reading
1/
1️⃣ Uni v3 Recap
LPs concentrate their capital with custom price ranges to provide greater amounts of liquidity within those ranges.
Uni V3 combines individual price curves to create an AMM function similar to v2.
1️⃣ Uni v3 Recap
LPs concentrate their capital with custom price ranges to provide greater amounts of liquidity within those ranges.
Uni V3 combines individual price curves to create an AMM function similar to v2.
2/
When a LP range is outside of current market price, the entire LP token is composed of the LESS VALUABLE of the two assets in the pair.
When a LP range is outside of current market price, the entire LP token is composed of the LESS VALUABLE of the two assets in the pair.
3/
E.g. Providing liquidity for $1200-$1400 $ETH/$USDC only requires $USDC deposits.
If $ETH breaks below $1200, the LP token consists of 100% ETH.
E.g. Providing liquidity for $1200-$1400 $ETH/$USDC only requires $USDC deposits.
If $ETH breaks below $1200, the LP token consists of 100% ETH.
4/
2️⃣ Onchain Leverage
Onchain leverage trading requires liquidators to maintain protocol health and prevent bad debt.
E.g. $LUSD stability pool and $GLP trader PnL buffer.
2️⃣ Onchain Leverage
Onchain leverage trading requires liquidators to maintain protocol health and prevent bad debt.
E.g. $LUSD stability pool and $GLP trader PnL buffer.
5/
Both instances require oracles and user liquidity to trigger liquidations. InfPools builds on Uni V3’s concentrated liquidity by lending out LP tokens to facilitate margin trading w/o the need for either.
Both instances require oracles and user liquidity to trigger liquidations. InfPools builds on Uni V3’s concentrated liquidity by lending out LP tokens to facilitate margin trading w/o the need for either.
6/
3️⃣ Uni V3 Leverage Benefits
Leverage via Uni V3 creates 5 key benefits that give context to the unique advantages of InfPool’s model, which are
✅ Unlimited leverage
✅ Unlimited assets
✅ Oracle free
✅ Liquidation free
✅ Scalability
3️⃣ Uni V3 Leverage Benefits
Leverage via Uni V3 creates 5 key benefits that give context to the unique advantages of InfPool’s model, which are
✅ Unlimited leverage
✅ Unlimited assets
✅ Oracle free
✅ Liquidation free
✅ Scalability
7/
✅ Unlimited Leverage + Assets
Liquidation leverage levels can scale infinitely because liquidity is secured upfront.
Any asset on Uniswap can be safely leveraged since protocol uses DEX liquidity.
✅ Unlimited Leverage + Assets
Liquidation leverage levels can scale infinitely because liquidity is secured upfront.
Any asset on Uniswap can be safely leveraged since protocol uses DEX liquidity.
8/
✅ Oracle + Liquidation Free
Prices are implicit to borrowed LP positions within underlying AMMs w/o relying on external oracles.
Leverage does not depend on cash loans.
Leveraged assets are paid back in kind (re: tweet 2/)
✅ Oracle + Liquidation Free
Prices are implicit to borrowed LP positions within underlying AMMs w/o relying on external oracles.
Leverage does not depend on cash loans.
Leveraged assets are paid back in kind (re: tweet 2/)
9/
✅ Scalability
W/o relying on oracles or liquidation bots, protocol can scale into ANY ASSET market and is only constrained by spot liquidity available.
i.e. Upon listing, Liquidation-free leveraged trading becomes available
✅ Scalability
W/o relying on oracles or liquidation bots, protocol can scale into ANY ASSET market and is only constrained by spot liquidity available.
i.e. Upon listing, Liquidation-free leveraged trading becomes available
10/
4️⃣ InfPools Basics
InfPools is a two sided marketplace for traders and LPs.
LPs either deposit assets directly into the protocol or lend out their Uni v3 LP tokens.
Traders can long assets by depositing collateral to borrow a concentrated LP position, e.g. $ETH/$USDC
4️⃣ InfPools Basics
InfPools is a two sided marketplace for traders and LPs.
LPs either deposit assets directly into the protocol or lend out their Uni v3 LP tokens.
Traders can long assets by depositing collateral to borrow a concentrated LP position, e.g. $ETH/$USDC
11/
5️⃣ Protocol Architecture
InfPool consists of
(1) Float Pool
(2) Swappers
(3) Linkage to external DEX / aggregator
5️⃣ Protocol Architecture
InfPool consists of
(1) Float Pool
(2) Swappers
(3) Linkage to external DEX / aggregator
12/
6️⃣ Leverage Process Flow
For easier illustration, assume the following
LP Pair: $ETH/$USDC
Collateral: $100
ETH Price: $1000
Borrowed: $1000 of ETH/USDC LP
Strike price: $900
6️⃣ Leverage Process Flow
For easier illustration, assume the following
LP Pair: $ETH/$USDC
Collateral: $100
ETH Price: $1000
Borrowed: $1000 of ETH/USDC LP
Strike price: $900
13/
InfPools combines LP assets into a concentrated liquidity AMM called the Float Pool (similar to Uni v3). Assets in the pool are available for swaps and loans. Both fixed and var. term loans are offered.
InfPools combines LP assets into a concentrated liquidity AMM called the Float Pool (similar to Uni v3). Assets in the pool are available for swaps and loans. Both fixed and var. term loans are offered.
14/
A Swapper containing LP tokens is created when a trader deposits collateral to borrow. Each Swapper has a predetermined strike price based on the trader’s collateral and desired leverage.
A Swapper containing LP tokens is created when a trader deposits collateral to borrow. Each Swapper has a predetermined strike price based on the trader’s collateral and desired leverage.
15/
The trader can exclusively swap between $ETH/$USDC at strike using the Swapper’s reserves. Having a strike price removes the risk of liquidation (to be explained later)
The trader can exclusively swap between $ETH/$USDC at strike using the Swapper’s reserves. Having a strike price removes the risk of liquidation (to be explained later)
16/
When a trader leverages (re: 13/), InfPool redeems the LP tokens in a Swapper for USDC and executes swaps with external DEXes for $ETH. They deleverage with a trade in reverse
When a trader leverages (re: 13/), InfPool redeems the LP tokens in a Swapper for USDC and executes swaps with external DEXes for $ETH. They deleverage with a trade in reverse
17/
7️⃣ Fees & Interest
Interest on fixed term loans are paid upfront (similar to an option premium).
Interest on var. term loans are based on utilization (similar to Aave).
The more LP tokens in a Swapper are borrowed the higher the rates.
7️⃣ Fees & Interest
Interest on fixed term loans are paid upfront (similar to an option premium).
Interest on var. term loans are based on utilization (similar to Aave).
The more LP tokens in a Swapper are borrowed the higher the rates.
18/
LPs earn yield from swap fees and interest from loans to traders for leverage.
LPs earn yield from swap fees and interest from loans to traders for leverage.
19/
8️⃣ Payoffs
There are three possible scenarios when a trader closes their position (re: 12/)
(1) $ETH up (e.g. to $1200)
(2) $ETH down to $950 (above strike)
(3) $ETH down to $750
8️⃣ Payoffs
There are three possible scenarios when a trader closes their position (re: 12/)
(1) $ETH up (e.g. to $1200)
(2) $ETH down to $950 (above strike)
(3) $ETH down to $750
20/
(1) $ETH to $1200
Trader sells $ETH for 1200 $USDC and repays 1000 $USDC debt to unlock $100 collateral
ROI: 200%
(1) $ETH to $1200
Trader sells $ETH for 1200 $USDC and repays 1000 $USDC debt to unlock $100 collateral
ROI: 200%
21/
(2) $ETH down but above strike
Trader sells $ETH for 950 USDC and uses $50 from collateral to pay off position and unlock $50 remaining collateral
ROI: -50%
(2) $ETH down but above strike
Trader sells $ETH for 950 USDC and uses $50 from collateral to pay off position and unlock $50 remaining collateral
ROI: -50%
22/
(3) $ETH down below strike
The trader’s debt now becomes 1.11 (1000/900) $ETH. Trader uses collateral to spot buy 0.11 $ETH to repay 1.11 ETH debt
ROI: -100%
(3) $ETH down below strike
The trader’s debt now becomes 1.11 (1000/900) $ETH. Trader uses collateral to spot buy 0.11 $ETH to repay 1.11 ETH debt
ROI: -100%
23/
Under InfPool’s model, the trader doesn’t get liquidated for (3) and is immune to shakeouts. They can simply wait for $ETH to rebound to close their position.
Under InfPool’s model, the trader doesn’t get liquidated for (3) and is immune to shakeouts. They can simply wait for $ETH to rebound to close their position.
24/
InfPool does not incur any bad debt since it will have sufficient $ETH to “re-create” the LP token and return it to LPs
InfPool does not incur any bad debt since it will have sufficient $ETH to “re-create” the LP token and return it to LPs
25/
9️⃣ Final Thoughts
InfPools is 100% a game changer bc of its omnipotence and scalability. The protocol is still in early dev.
You can read their whitepaper for more info:
discord.com
9️⃣ Final Thoughts
InfPools is 100% a game changer bc of its omnipotence and scalability. The protocol is still in early dev.
You can read their whitepaper for more info:
discord.com
26/
LP token borrowing can also be used to create other option payoffs (re: Gammaswap, Panoptic).
Won’t be surprised if the team launches other structured products or vanilla options in the near future
LP token borrowing can also be used to create other option payoffs (re: Gammaswap, Panoptic).
Won’t be surprised if the team launches other structured products or vanilla options in the near future
27/
Other protocols utilizing Uni V3 concentrated LP for their strategies will lead to liquidity fragmentation and reduce depth.
Uni V3 LP Wars incoming!?!?!?
Other protocols utilizing Uni V3 concentrated LP for their strategies will lead to liquidity fragmentation and reduce depth.
Uni V3 LP Wars incoming!?!?!?
28/
If you learned something, pls like + RT the first tweet:
If you learned something, pls like + RT the first tweet:
29/
I regularly post protocol breakdowns and institutional grade research reports for free. Follow me so you don’t miss them!
I regularly post protocol breakdowns and institutional grade research reports for free. Follow me so you don’t miss them!
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