Olympus DAO Founder Unveils Stablecoin Swap Protocol

.

The anonymous founder of Olympus DAO, who identifies himself as Zeus, has taken to Twitter to reveal his latest brainchild.

The pivotal concept behind the project is to replace pricing curves by laying out a predefined range for pooled tokens. Here, Range assumes that tokens in the pool are or will be worth $1 so that they can be traded at 1:1 with each other. 

How does it work

Zeus illustrates the functionality:

As long as the tokens that are swapped in and swapped out stay within the ranges, the trades should progress without any hiccups. 

How is Range relevant

Range pools might swing between extreme ranges as the tokens fluctuate around the peg in the initial phases. In these cases, the protocol will offer liquidity for arbitrage against the deviations. Since it makes no effort at pricing, the price ratio will always remain 1:1. However, any time it is not $1 for $1 in external markets, a big share of the pool can get arbitraged. This is expected to result in high fee accrual per unit liquidity.

“The $10m TVL Range Pool can do a $3m trade from DAI to LUSD. The price between DAI and LUSD rises from 1.00 to 1.01. An arbitrageur can buy $3m LUSD from the RP and sell it for $3.03m on curve. In the process, the RP made a fee on 30% of its TVL,” he elaborates. 

One of the biggest beneficiaries of the protocol would be Olympus DAO, the community-owned financial infrastructure behind the decentralized reserve currency OHM. In fact, the project was started as a treasury allocation strategy for Olympus. RangePool will allow it to productively deploy its reserves in an isolated environment where the exposure to different assets is defined and controlled. 

Related: What Is Olympus DAO (OHM) And Why Is It On A Gaining Spree

Some pros and cons 

The most obvious merit of the protocol is the near-perfect execution of trades at 1:1 with a small reduction of fees. It claims to save gas fees, as swaps are bound to be less expensive than alternatives. Moreover, since the exposure to each asset in the pool is strictly defined, users know the range the pool will swing between. This fortifies it against depegs. 

Coming to the drawback, Range is not a 24/7 pool. The scenario could be different if there is massive liquidity. However, in the early stages, users may come across situations where some tokens cannot be added or removed. 

What to expect

In the initial phase, RangeSwap is launched with a genesis pool. Both ranges and tokens in the pool are subject to changes. Currently, USDC/USDT is blocked from entering the pool because of a decimal issue. 

It is important to note that there is no token for RangeSwap as of now. The team is working on proving the model before deciding whether tokens are relevant to the platform. It is aiming for integrations on 1inch, Zapper, and Matcha among others to fuel intense activity. 

Since the protocol has not been audited yet, Zeus advises caution:

Stay up to date on crypto news!

Sign up for our newsletter for all the hottest crypto stories, ICO reviews, and insights from leading experts of the crypto world - four times a week.

You have been signed up!