Mooniswap Liquidity Pool (ETH-USDC) Collateral Application
1. Who is the interested party for this collateral application?
2. Provide a brief high-level overview of the project, with a focus on the applying collateral token.
Mooniswap is an Automatic Market Maker (AMM) that uses the constant-product invariant, with the extension of virtual balances. Unlike other AMM designs, Mooniswap’s virtual balances blunt the price impact of the short-term trading volume slippage. This allows profits that would otherwise be captured by arbitrageurs to instead be captured by liquidity providers. This makes Mooniswap significantly more profitable for liquidity providers than most other AMM designs.
There are two user groups, (1) traders that use mooniswap to swap one crypto-asset for another (2) liquidity providers who provide liquidity for traders in exchange for a small fee on every trade.
In the event of a market dump, the value behind the ETH-USDC pool would not drop as much as the price of ETH. This is because in the pool sale USDC for ETH, the loss is not as great as it would be with only ETH.
People earn APR by sitting in the pool and can leverage their APR with DAI.
3. Provide a brief history of the project.
Mooniswap is AMM that created by the 1inch team. 1inch team is best known for the 1inch Dex Aggregator.
Mooniswap was launched August 10, 2020 as a way to benefit liquidity providers. The Mooniswap design originates with Vitalik Buterin’s idea of virtual quantities to protect from front-running. The concept of virtual quantities is fully realized in the Mooniswap design.
The new AMM is capable of keeping most of the slippage revenue in the pool by maintaining virtual balances for different swap directions. When a swap happens, a market maker does not automatically apply the invariant algorithm and displays the new prices for upcoming trades. The AMM improves exchange rates for arbitrage traders slowly, over approximately a 5-minute time period. As a result, they will be able to collect only a portion of slippage, while the rest will remain in the pool shared among liquidity providers.
4. Link the whitepaper, documentation portals, and source code for the system(s) that interact with the proposed collateral, and all relevant Ethereum addresses. If the system is complex, schematic(s) are especially appreciated.
Mooniswap Whitepaper: https://mooniswap.exchange/docs/MooniswapWhitePaper-v1.0.pdf
Mooniswap Code: https://github.com/CryptoManiacsZone/mooniswap
5. Link any available audits of the project. Both procedural and smart contract focused audits.
6. Link to any active communities relating to your project.
Telegram Channel: https://t.me/mooniswap
Telegram Chat: https://t.me/mooniswapchat
7. How is the applying collateral type currently used?
The Mooniswap liquidity pool tokens are not used by any other protocol besides Mooniswap currently. They are given to liquidity providers who provide liquidity into the Mooniswap pools.
Being able to use liquidity pool tokens as collateral incentivises the Mooniswap ETH-USDC pool, this is beneficial as it allows people to trade ETH-USDC with less slippage
8. Does one organization bear legal responsibility for the collateral? What jurisdiction does that organization reside in?
No one bears legal responsibility as this is a protocol.
9. Where does exchange for the asset occur?
Not aware of any markets for the ETH-USDC Mooniswap liquidity tokens outside of Mooniswap itself. Mooniswap allows redemption between liquidity tokens and the underlying assets at any time. By definition, there is always the required liquidity for this redemption.
10. (Optional) Has your project obtained any legal opinions or memoranda regarding the regulatory standing of the token or an explanation of the same from the perspective of any jurisdiction? If so, those materials should be provided for community review.
11. (Optional) Describe whether there are any regulatory registrations for the token and provide related documentation (including an explanation of any past or existing interactions with any regulatory authorities, regardless of jurisdiction), if applicable.
12. (Optional) List any possible oracle data sources for the proposed Collateral type.
Likely, the best way to go about this is to have oracles report the prices for the underlying assets and then get the ratio from the Mooniswap contract. Mooniswap does have an oracle system discussed in 3.5 of the whitepaper.
13. (Optional) List any parties interested in taking part in liquidations for the proposed Collateral type.