GC Deep Dive — Matter DeFi
Sustainable yield farming via automatic buyback-and-burn.
First of all we’d like to celebrate one month of SpicySwap live on Tezos mainnet. At Genius Contracts we’re glad to see a warm community response to SpicySwap. Looking for liquidity incentives? Try Spice Farming on SpicySwap, or check out SalsaDAO for more farms that use Spicy LP.
We’ve also enjoyed a successful integration with Crunchy Network’s WTZ, which allows users to trade and provide liquidity on Spicy while retaining Tezos baking rewards. Since WTZ is always on peg, we’ve been able to add native XTZ as an available asset on SpicySwap (via WTZ). Look forward to more interface updates coming soon on SpicySwap!
Today, we’d like to introduce the first contract-level integration to SpicySwap: Matter DeFi. Matter DeFi is a yield farming platform that includes an automated buyback and burn function to reinvest all fees back into the platform. Following the theme of sustainability, Matter DeFi will start off with a fair launch during the Big Bang IFO event.
In this article we’ll be detailing the different parts that make up Matter DeFi, and the benefits that the platform will offer. Thanks to sDAO community leader Teztees for the Matter graphics and lore!
To enable Matter DeFi’s flagship feature, automated buyback and burn, we need trusted on-chain prices for the assets that are being converted. To do this we’ve created the Heartbeat Oracle, a time-weighted average price (TWAP) aggregator that uses SpicySwap’s TWAP feature to aggregate prices for different liquidity pools. Using a time-weighted price ensures that the Matter protocol is not losing funds to arbitrageurs when buybacks are executed.
SpicySwap TWAPs are available for every existing pool, and are queried over time by the Heartbeat Oracle to provide on-chain prices. To begin, the Heartbeat Oracle will be a GC-run product, with private price feeds. Gas fees for regular updates will be paid by our in-house HeartBot💗. We are researching the possibility of switching to a decentralized oracle design in the future, where feeds are open to the public.
As of now, Matter DeFi will rely on the Heartbeat Oracle to execute automated DEX actions. The main use of the TWAP is to make sure that the reserves in the liquidity pair have not been manipulated by a third-party at transaction time. Heartbeat will be a key part of integrating into SpicySwap for safe contract-level interactions for future projects as well.
Next let’s jump into Matter DeFi’s launch event, the Big Bang IFO.
The Big Bang IFO
Dark matter does not interact with light, making it extremely hard to spot. Researchers have been able to infer the existence of dark matter only from the effect it has on matter. [CERN]
The Big Bang IFO will be Matter DeFi’s launch event. To be a fair and sustainable DeFi platform, getting the launch right is key. Our aim for the launch is to bootstrap a healthy MTTR/WTZ liquidity pool on SpicySwap so that the core DEX interactions run smoothly.
Rather than start with a pre-sale or pre-mine, our plan is to start Matter off with a special farming phase called the Big Bang. The Big Bang IFO event will allow interested parties help ensure a steady future for Matter DeFi. Contributing XTZ during the Big Bang sale will purchase Dark Matter (dMTTR) tokens which will be used in the Big Bang farming phase.
Essentially, Dark Matter tracks how much each participant contributed during the sale phase. At the end of the sale, each user will have dMTTR in their proportion of the total amount raised during the sale. Dark Matter will then be farmed to receive a share of 1,000,000 MTTR initial farm emissions. For example, if a user’s contribution was 5% of the total XTZ raised, they will receive 5% of the 1,000,000 MTTR initial farm emissions.
During the Big Bang farming phase there will be one public farm on Matter, dMTTR -> MTTR. This serves as the initial distribution of the MTTR token. For convenience, Dark Matter will automatically be staked at purchase time so that MTTR rewards are not missed. Dark Matter will have no utility after the Big Bang IFO, so speculating on it’s future value is not recommended.
When matter and antimatter come into contact, they annihilate — disappearing in a flash of energy [CERN]
All XTZ raised will be used to create a MTTR/WTZ liquidity pool on SpicySwap. GC will use Anti-Matter (aMTTR) tokens to privately farm 1,000,000 MTTR tokens, equivalent to the 1,000,000 MTTR distributed to IFO participants.
The MTTR/WTZ liquidity pool will be created by GC with 1,000,000 MTTR and all XTZ raised from the IFO. The LP shares resulting from this pool will be burned, locking the value into the pool forever.
For example: if the IFO raises 10k XTZ, the IFO Price of MTTR will be 10k/1M = 0.01xtz per MTTR. The LP will be started at the same price, 10k/1M = 0.01xtz per MTTR.
GC retains 0 MTTR and 0 XTZ from the Big Bang IFO. Anti-Matter will have no utility after the Big Bang IFO, and will be burned. Once the pool is created, the Big Bang farm will end and Matter DeFi will start running at full capacity.
Matter DeFi Tokenomics
Matter DeFi uses a classic formula: users stake assets on Matter and receive MTTR rewards for staking. Matter has a 5% fee on stake and unstake, which is reinvested back into MTTR (fees are not finalized).
To begin, Matter will be offering mainly SpicySwap LP share farming, and MTTR buybacks will begin as soon as fees are generated. The automated buyback is routed through SpicySwap pools, using the Heartbeat Oracle for prices. Matter will also launch with a MTTR -> MTTR single-staking pool for easy compounding of MTTR rewards.
On stake and unstake events, 5% of the total amount is sent to the Matter Calculator contract, which handles converting the staking currency to MTTR. Matter Calc is built using dynamic token handlers, meaning we can add more interesting farms on Matter like single-token farms, stable-stable farms, casino share farms, and more in the future. As an additional incentive, paying the gas for executing the buyback via Matter Calc will return 0.1% of the final amount to the caller as a bounty. GC will have a bot on this, but executing buybacks will be open to the public.
The initial emissions will be set to 100,000 MTTR per year; this number was chosen as 10% of the 1,000,000 MTTR initial distribution, mirroring the 10% total platform fees. The target is to achieve a 1-year staking volume equal to or greater than the amount of XTZ raised during the Big Bang IFO.
Matter DeFi Goals
Matter DeFi is built for generating sustainable yield, but the contract-level integration to SpicySwap creates extra benefits.
Matter DeFi is built to be the first step in creating real DeFi Legos on Tezos. Matter uses integrations through multiple projects to build an innovative take on a classic product, similar to DeFi on more established smart contract platforms. Open-sourcing the functions for automated conversions will also be a goal for GC moving forward. These SpicySwap integration patterns can be reused for functions like automated limit orders, options, and arbitrage. Matter DeFi is an example of higher-level DeFi on Tezos.
Matter DeFi is also a tool to bring SpicySwap more volume and liquidity. The initial plan is to farm stable/WTZ pairs on SpicySwap so that we have stronger liquidity for popular pools. Once stable liquidity is achieved, we will look to add stable-stable farms for low impermanent-loss staking. Going further, each stake and unstake event will generate opportunities for Spice Farmers to gain fees from automated conversions.
Finally, Matter DeFi will offer benefits for SalsaDAO, the governance organization for all GC products. GC will curate the farm parameters to start, then SalsaDAO will gain control via proposal-based governance. In addition to this, SalsaDAO-exclusive farming phases will occur from time to time. Random snapshots will decide a list of holders that will have access to new farms before the general public.
Matter DeFi contracts have been deployed on Hangzhounet and are undergoing tests. The Heartbeat Oracle has been deployed and is undergoing tests. Look forward to the testnet Matter UI and more info on the Big Bang IFO. Thanks as always, and use SalsaDAO to find relevant links to DApps and socials.