What is Ellipsis Finance?
There's no secret that the open-source culture has led to similar DeFi protocols emerging on virtually any layer-1 blockchain with smart contract capabilities. Ellipsis Finance represents the Curve version deployed on BNB Chain.
The story of Ellipsis Finance started in 2022, when they've came up with the idea of creating a fork of Curve on BNB Chain. This means BNB Chain users finally have a protocol where they can swap stablecoins with small fees and extremely low slippage.
Since Ellipsis Finance is a copy of Curve, the code inherits the resilience of Curve protocol. Neither Curve nor Ellipsis Finance have been hacked.
Unlike Curve, Ellipsis isn't fully decentralized. The protocol is permissionless in the sense that no KYC is required, but they lack a governance structure. The Ellipsis team is solely in charge of implementing the upgrades, and it's worked great so far.
All Ellipsis contracts are controlled by a 3-of-5 Gnosis Safe multisig. Multisig membership includes two Ellipsis founders, two members of Curve Finance and one of Yearn. Requiring three signers ensures no single entity can perform a malicious action or otherwise abuse the admin powers within the protocol.
How does Ellipsis Finance work?
Ellipsis is a decentralized exchange, and an authorized fork of Curve Finance on BNB Chain. Just like Curve Finance, Ellipsis is an AMM focused on exchanging stablecoins. Because stablecoins have a small deviation from the price (usually between $0.95 and $1.01), the Ellipsis Finance model favors stability over volatility and speculation.
Ellipsis Finance relies on liquidity pools to achieve successful exchange volume and low slippage. The higher the volume, the lower the slippage. Crypto pools use liquidity more effectively by concentrating it at current prices. As trades happen, the pool readjusts its internal price to the highest liquidity region without creating losses for the pool. Crypto pools also have variable fees which can range between 0.04% and 0.45%.
Ellipsis Finance has 3 main types of pools: Meta, Base, and Factory Pools.
Base Pools are made out of three crypto assets: BUSD, USDC and USDT. They work just like any other DeFi pool in the sense that LPs get a share of the fees in addition to EPX tokens. Recently, Ellipsis has launched the btcEPS pool, consisting of renBTC and WBTC.
Metapools allow a single coin to be pooled with the coins from a Base pool without diluting its liquidity. Currently, the most common Base pool is the 3EPS pool. It uses the three most liquid stablecoins: BUSD, USDC, USDT. As a result, depositing one of the stablecoins will give you exposure to all of the crypto assets in the pool.
The factory enables the creation of permissionless pools – anyone can now deploy a pool for their stablecoin. Pool creators must seed the pools with the initial liquidity. The ideal staring amount is $500,000.
How to make money on Ellipsis Finance?
If you are participating in the BNB Chain ecosystem, Ellipsis Finance can help you multiply your profits in the safest way possible by using stablecoins. Let's say you have hedged your risk by converting your crypto assets into stablecoins. Your portfolio is now shielded from the market volatility, but it's not capital efficient. In other words, your stablecoins are sitting idle rather than producing yields.
With Ellipsis Finance you can put your stablecoins at work while being shielded from the market volatility. Although yields on stablecoin pools are much more conservative than non-stable crypto assets, they are high in demand for traders who want to swap stablecoins for various DeFi strategies. Moreover, Ellipsis Finance offers a couple ways to boost your profits beyond the regular stablecoin yields.
Ellipsis Finance Swaps
Swaps are a necessary feature for every AMM. On Ellipsis Finance, the variety of assets you can swap is limited to stablecoins and synthetic assets. For example, you can swap your MATIC deployed on Ankr (aMATICb) for the native token MATIC. This is a necessary step for moving your tokens from one chain to another. In our example, the swap migrates from Ankr to the Polygon network.
Swapping on Ellipsis Finance can be part of a wider DeFi strategy. The arbitrage opportunity is very low due to the low slippage. If you have detected a better way of making profits on another chain, Ellipsis swaps can help you migrate your funds with low fees and minimal slippage.
To make a swap on Ellipsis Finance, follow these steps:
1. Open the Ellipsis Finance app
2. Click on the "Swap" tab
3. Select the assets you would like to swap and input the amount
4. Click to swap
5. Approve the transaction
6. Done! 🥳
Slippage can never be zero. This is because liquidity pools are always fluctuating in volume. Traders are constantly depositing new liquidity and withdrawing, which can create a supply imbalance. Ellipsis Finance allows you to customize the slippage tolerance before executing the swap. While in the Swap tab, click on "Slippage tolerance" to adjust your slippage. If the slippage is above your threshold, the trade will revert.
Choosing a higher slippage tolerance will ensure your swap goes through. If you are not in a hurry, you can choose the lowest slippage rate and wait for the opportunity to swap. A 1% slippage rate is acceptable in most cases. The bigger the swap, the more impact will the slippage rate have.
Ellipsis Finance Yield Farming
Ellipsis has has pools for a wide variety of tokens. When you provide liquidity to a pool, no matter what coin you deposit, you gain exposure to all the coins in the pool which means you want to find a pool with coins you are comfortable holding.
You can choose to deposit one, some or all the coins into the pool and it won't affect your returns. For a pool with BUSD, USDC and USDT you can choose to deposit either of the tokens. BUSD deposits are preferred as they give an instant 0.0571% bonus (Ellipsis is on BNB Chain after all).
The pools are always trying to balance themselves and go back to equal parts, so depositing the token with the lowest share will get you a deposit bonus.
To provide liquidity on Ellipsis Finance, follow these steps:
1. Open the Ellipsis Finance app
2. Click on the "Pool" tab
3. Select the pool you would like to join
4. Input the amount of liquidity you would like to supply. It can be for one asset, some, or all.
5. Click on the "Add Liquidity" button
6. Approve the transaction
7. Profit
After depositing in the pool, you receive liquidity provider (LP) tokens. They represent your share of ownership in the pool and these can be staked for EPS.
Ellipsis Finance $EPX
Currently EPX has three main uses: voting, locking and boosting. If you have previously interacted with LP tokens then the process is quite straightforward. EPX can be locked to receive trading fees from the Ellipsis protocol. These fees will be paid out in the tokens as they are collected; so fees in renBTC will be available as renBTC, BUSD will be available as BUSD etc.
Fees are collected over one week, and then paid out the following week. For example, fees collected from day 1 to day 7 (Week 1) will be paid out between day 7 and day 14 (Week 2).
To stake your LP tokens, follow these steps:
1. Open the Ellipsis Finance app
2. Click on the "Pools" tab
3. Select the pool you would like to provide liquidity (most pools offer the EPX staking option)
4. Click on the "Stake LP" tab
5. Approve the Ellipsis contract to use your EXP tokens
6. Deposit the tokens
7. Profit
Besides simply staking your EPX, there is also the option to boost the rewards by locking your EPX and acquire vlEPX (vote-locked EPX). vIEXP is simply EPX locked for a period of time. The longer you lock EPX for, the more vlEPX you receive.
The cool thing about EPX is that users can have multiple locks for the same account. This offers savvy traders a degree of flexibility. They can coordinate their unlocks based on the token emission schedule or personal strategies. Furthermore, lockers do not have to vote. Lockers can claim platform fees even if they do not vote.
To lock your EXP tokens and boost your rewards, follow these steps:
1. Open the Ellipsis Finance app
2. Click on the "Lock" tab
3. Select the amount of EPX tokens to lock
4. Select the lockup duration
5. Click on "Lock"
6. Approve the transaction
7. Done!
Expired EPX locks must be claimed before you can withdraw your EPX. Released EPX is then streamed out over a period of 7 days. During those 7 days released EPX can be claimed at any time.
Price Prediction for Ellipsis Finance — Can it hit $1000?
Buying and hodling EPX — the native token of Ellipsis Finance — is one way of potentially making money on Ellipsis.
The main purposes of the EPX token are to incentivize liquidity providers on Ellipsis and to allow users to participate in the incentive distribution.
By looking at its current price, it’s natural to think about the chance of EPX hitting $1 per token. This can happen sooner, or way in the future, and is determined by a couple of ever changing factors.
Let’s examine the potential growth of the EPX token by analyzing its tokenomics. EPX’s current market cap sits comfortably at ${MARKET_CAP}. With {CIRCULATING_SUPPLY} EPX tokens being in circulation today, that means a price of {PRICE} per EPX.
How did we come to that calculation? It’s quite easy, the price of an EPX token is equal to its current market cap divided by the number of tokens in circulation. Dividing ${MARKET_CAP} by {CIRCULATING_SUPPLY} gives us a result of {PRICE} for each EPX coin.
By changing the order in the simple formula above we can use it to calculate other things as well. This helps us a lot because we can deduce the market cap of EPX at different token prices. Then, we can use the result to compare it to the current state of the network and see what would be required for EPX to hit that price.
At a price of $1 per token, that means the current market cap of EPX would equal ${{CIRCULATING_SUPPLY} * 1}. Remember that we arrived at this number by multiplying the amount of circulating tokens by $1.
Now let’s shift our attention to the fully diluted market cap.
Some blockchains may have their tokenomics built in a way that only a small percentage of tokens are circulating at the beginning. This can be misleading because we don’t have the full picture and only take into account the current number of coins released in the market.
The fully diluted market cap represents the total value of a coin if all tokens were in circulation. EPX’s whole supply of tokens is {MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} EPX which means that no more coins above that number will ever be created.
These tokens are not created at the discretion of a specific entity. They are created automatically by the network to reward different actors that keep it secure.
How does this impact the price of EPX? Taking into account the current price of an EPX token, that would result in a fully diluted market cap of ${MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY * PRICE}. EPX coins that have been burned are not taken into consideration because they have been permanently removed from circulation.
Whether it seems gigantic or not, the number we came to above only takes into account the current price of an EPX token. Doing the same calculation but with a price of $1 gives us a result of ${{MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} * 1} for the EPX protocol fully diluted market cap.
These are all crucial details to know when calculating if EPX can reach the price of $1 per token. If the diluted market capitalization is way too high, the token has little room left to grow. Blockchains in general have no cap on the value they can reach, whether that number seems possible it’s totally up to you.
The future of EPX depends solely on its growth as a network used by tens and hundreds of millions of users.
If you’re looking to add some EPX to your portfolio, the most trusted places to get some are Binance and Coinbase.