SolidLizard project on Arbitrum with a sudden surge in TVL from 20M to 120M within 7 days. What’s special about it? Let’s find out with defilearn in this article.
Nội dung bài viết
What is SolidLizard?
SolidLizard is a decentralized exchange operating on AMM mechanism built on Arbitrum. It uses Andre Cronje’s Ve(3,3) governance model applied on Solidly. In other words, SolidLizard is a fork on Arbitrum of Solidly, a famous project that once had a TVL increase to more than 2.3B$ within 7 days on Fantom in early 2022.
SolidLizard has 2 types of pools: Stable pool and Variable pool.
The Stable pool uses the Curve Stable Swap model, allowing trading of correlated assets such as (USDC – USDT) in large quantities with the lowest slippage.
The Variable pool is used for highly volatile assets, using the XxY = k formula like popular AMMs such as Uniswap or Sushiswap…
Transaction fees from the Variable pool are 0.4%, and Stable pool is 0.2%.
What’s special about SolidLizard?
Ve(3,3) mechanism
Liquidity provider: Users provide liquidity on SolidLizard to receive rewards in SLIZ emitted from SolidLizard. However, the rewards for each pool are different, depending on the vote of veSLIZ holders.
This mechanism provides a solution to enhance liquidity for current projects on Arbitrum in 2 ways:
- Accumulate a lot of veSLIZ to vote for themselves.
- “Bribe” veSLIZ holders to vote for their pool.
Goal: Increase the reward of SLIZ emitted into liquidity pools => High APR => More liquidity provided.
veSLIZ
veSLIZ is the most important part of the Ve(3,3) mechanism. Users lock SLIZ => receive veSLIZ. veSLIZ holders have the right to vote on the protocol.
Benefits of veSLIZ voters:
- Receive 50% of trading fees from the pools they voted for.
- Receive 100% of the “bribe” money from the pools they voted for.
- Receive SLIZ rewards every week in the form of veSLIZ.
SLIZ tokenomics
SLIZ does not have a maximum supply. It starts with emitting 15M tokens in the first week and reduces by 3% each following week.
50% of trading fees from the protocol will be used to buy back SLIZ to enhance liquidity for the ETH/SLIZ pool.
Additionally, if the ratio of veSLIZ to total supply is larger, the emission ratio of SLIZ will be lower, starting from the first milestone of 30%. This mechanism is implemented to limit inflation.
Utility: Reward liquidity providers (in the form of SLIZ) and veSLIZ holders (in the form of veSLIZ).
On-chain analysis
TVL doubled (from 60M to 120M) after A16z added $7.7M to the WETH/USDC pool on the protocol. Trading volume also consistently reached new ATHs every day.
The total supply of SLIZ currently stands at ~40M, with over 22M SLIZ locked into veSLIZ, accounting for 54.7%.
However, the lock ratio of veSLIZ is trending down each week. This is due to the large amount of SLIZ emitted after each Epoch.
Conclusion
SolidLizard offers a solution to enhance liquidity forArbitrum ecosystem, with an inflation model boosting TVL; so SLIZ is not a token that can be held for investment in the long term. If the project is successful and enters a stable period, investment opportunities can come from protocols that hold the majority of veSLIZ tokens such as ConVex finance (for Curve) or Aura finance (for Balancer).
Summary of whale wallets holding SLIZ: https://s.depocket.com/Slizwhale
