Flamingo Litepaper
Version 1.5 August 2022
Flamingo Finance is a Decentralized Finance (DeFi) platform where users can convert assets, wrap assets, provide liquidity, and earn yield through staking. Flamingo's SmartStake feature enables users to perform all of these actions in a single click.
The Flamingo token (FLM) functions as the rewards token users can earn by adding liquidity to liquidity pools and staking their liquidity pool tokens (LP tokens). The platform facilitates automated transactions between cryptocurrency tokens on the Neo N3 blockchain through the use of smart contracts.
The project was initially launched by Neo Global Development* (NGD), underscoring Neo's vision to build the Smart Economy, of which DeFi is a crucial component.
*Neo Global Development (NGD) is the execution arm under Neo Foundation.
The Flamingo Finance DeFi platform is compiled of several asset actions users can take: SmartStake, Convert, Wrap & Unwrap, Add Liquidity, Remove Liquidity, Stake, and Unstake. Users can perform any of these actions via the Asset Actions tab.
Convert is Flamingo's on-chain Auto Market Maker (AMM). Flamingo's AMM adopts the Constant Product Market Maker (CPMM) model, which was popularized in many AMM-based DEXs, such as Uniswap. CPMMs are based on the function x∗y=kx*y=k, which establishes a range of prices for two tokens according to the available quantities (liquidity) of each token.
With the Convert action, users can swap any tokens and wrapped tokens available on the Flamingo platform, including FLM, NEO, bNEO, GAS, pONT, fUSDT, fWETH, fWBTC, fCAKE, GM, SWTH, and WING. When converting tokens, users can adjust Slippage and Deadline settings.
The Slippage setting is the amount (a percentage from 0.0% to 0.5%) a user is willing to lose when converting tokens. Converting tokens is a block-based action and anyone can execute the same swap directly before, on the same block. This can calculate the price incorrectly, and because of the number of trades on any given block, the transaction could fail if a user doesn't add slippage.
The Deadline setting is an amount of time users can set to revert from converting. This is beneficial when a block is full. For instance, if Neo has 1M transactions per second and a user fills up the mempool, and a user stays in that pool for five days, the user could lose money through convert if the transaction is still valid. Adding a deadline makes sure that in such circumstances the signed transaction is invalid after the designated amount of time.
Wrap and Unwrap are crosschain asset gateways for the Bitcoin, Ethereum, Neo, BNB Chain, and Ontology Network blockchains. Users can wrap tokens such as NEO*, WETH, WBTC, ONT, CAKE, and USDT onto the Neo blockchain as NEP-17 tokens (bNEO, fWETH, fWBTC, pONT, fCAKE and fUSDT). Conversely, wrapped NEP-17 tokens can be redeemed back for native tokens via Unwrap. More tokens will be added to the list as the project develops.
*Since NEO is indivisible, bNeo (https://neoburger.io) has taken the role of nNeo to wrap and divide Neo on N3.
With the Add Liquidity asset action, users can provide liquidity to any number of liquidity pools by providing equal liquidity on both sides of a trading pair. A liquidity pool is composed of a pair of NEP-17 tokens. Consequently, liquidity providers receive LP tokens corresponding to their deposited assets. Holding LP tokens gives liquidity providers the ability to earn passive income via trading fees, proportional to their contributions to the pool. 100% of the trading fees from adding liquidity will be distributed to liquidity providers, which means the amount of the underlying token that can be redeemed by each LP token increases. LP tokens will be burned when liquidity providers withdraw their liquidity, and they can get back their deposited NEP-17 token pairs.
Upon choosing a token and quantity to trade, users will be matched with the price and quantity of the target token (decided by the liquidity pool status). Instead of using a traditional buy/sell order book, both sides of the trade are pre-funded by on-chain liquidity pools. The current trading fee is set at 0.3%. When a user wants to trade A to C without sufficient liquidity in the pool, or the relevant pool has not yet been established, the trading router will automatically search for an optimal trading route to execute the trade.
Users can remove liquidity at any time to swap LP tokens back to the corresponding assets.
Once users have added liquidity, they can stake their LP tokens to earn rewards in FLM. Each liquidity pool earns an annul percentage yield (APY) which is calculated by the total value of liquidity locked vs the value of how many FLM tokens are minted per year for the pool. For example, if there is $100,000 USD total in a pool, and that pool gets 1,000 FLM tokens per day, and each FLM token = $0.10 USD, then 1,000 * 365 = 365,000 * $0.10 = $36,500 USD. $36,500 / $100,000 * 100 = 36.5% APY.
Each liquidity pool is allocated a percentage of the total FLM minted in a year.
Liquidity Pool | Minted FLM annual allocation | FLM Minted Per Day |
|---|---|---|
FLM-bNEO | 30.30 | 108,214 |
FLM-GAS | 5.00% | 17,857 |
FLM-fWBTC | 5.00% | 17,857 |
FLM-fUSDT | 5.00% | 17,857 |
FLM-fWETH | 5.00% | 17,857 |
FLM-pONT | 0.80% | 2,857 |
FLM-GM | 0.80% | 2,857 |
FLM-fCAKE | 2.50% | 8,929 |
FLM-SWTH | 1.30% | 4,643 |
bNEO-fUSDT | 5.00% | 17,857 |
bNEO-fWBTC | 5.00% | 17,857 |
bNEO-fWETH | 5.00% | 17,857 |
bNEO-GAS | 3.80% | 13,571 |
fWBTC-fUSDT | 5.00% | 17,857 |
FLM-WING | 0.50% | 1,786 |
FLUND | 20% | 71,429 |
Users can unstake their LP tokens at any time. Once their tokens are unstaked, users will still own LP tokens but the tokens will no longer be staked into liquidity pools. Users can remove liquidity at any time to swap LP tokens back to the corresponding assets.
Flamingo's very own SmartStake feature allows users to wrap assets, add liquidity to a trading pair liquidity pool, and stake their LP tokens all in a single click.
First and foremost, the Flamingo Single Stake Fund (FLUND) is a DEX-Traded Fund (DTF), similar to an Exchange-Traded Fund (ETF). Investors can invest FLM into the Flund to earn FLM yield. The Flund is non-inflationary and will not dump the token price once minting is done, as other single-stake pools have been known to do.
In the beginning, the Flund will get 20% of the FLM minting rewards distribution, and it will also get roughly 16% of all activities on the platform. When investors invest FLM in the Flund, they’ll receive FLUND tokens. The FLUND tokens will increase in FLM value since it represents the investor’s share of the Flamingo Flund. The Flamingo Flund grows every time a trade is made on Flamingo.
For example, when someone trades 1,000 GAS to NEO on Flamingo, they pay a fee of 3 GAS, of which 0.5 GAS (~16%) goes to the Flund. When investors enter or exit (buy or sell) the Flund, the assets that have accumulated from fees, etc. will be converted to FLM (which we call a settlement) if certain conditions are met. The conditions for converting a non-FLM asset in the Flund upon settlement is that the value of the asset in question must be above 100 FLM. The Flund therefore will create a buying pressure on FLM since it takes all incoming assets and sells them to buy FLM.
The Flamingo Flund works in the following ways:
- Investors buy a portion of the Flund DTF using FLM. Any token can be used to buy, and will be automatically converted to FLM to buy FLUND tokens.
- The Flund gets 20% of minting rewards in the form of FLM.
- The Flund gets 16% of all fees from the platform.
- All income is converted to FLM when investors enter and exit the Flund. Note that only assets with an accumulated value of more than 100 FLM will be converted to save GAS costs.
- Yield is not claimable but added to the Flund, and therefore investors share value.
- Investors get their yield in the form of increased FLM when exiting the Flund.
- There is a 2.0% exit fee to discourage short term investors and possible exploits.
The Earn module is Flamingo's one-stop asset manager, integrating asset staking and collateralized stable coin issuance. On the Earn page, users can see which tokens are available for staking on Flamingo, the user's current staked tokens, and the user's staked tokens' value.
After staking LP tokens, users mint FLM in real time, released to them as Unclaimed FLM tokens. Users can then Claim the distributed FLM as Rewards and the claimed FLM rewards are immediately sent to the user's wallet. The Earn page shows in real time how much FLM a user has earned along with its USD value--both the current value held as well as how much a user is earning by the second, minute, hour, day, month, and year.
Earn has two main functions:
- 1.Users can track their rewards in real time and can claim their rewards in FLM after staking NEP-17 tokens (LP tokens).
- 2.Users can also view various data points on their staked LP tokens such as LP token price, APY, holdings, and total value of their holdings.
A reverse pool lets users stake FLM and a second token like any other Flamingo liquidity pool; however, it does not pay staking rewards in FLM but a different token. The staking reward will often be the second token, but it can also be any other token on Neo. For instance, there could be an FLM-bNEO pool that pays rewards in NUDES.
Reverse Pools on Flamingo:
- FRP-FLM-NUDES
- FRP-FLM-CANDY
- FRP-FLM-DOGEF
- FRP-FLM-DOGER
- FRP-FLM-LRB
- FRP-FLM-USDL
- FRP-FLM-SOM
A reverse pool is a great way to achieve price discovery and let the market decide a token’s price. The project will then get rewarded with a higher token price if they do something that makes the market want their token. It’s also beneficial because it helps distribute the project token to users that believe in and hold and/or stake the project’s token.
Reverse pools are also an excellent way for Flamingo to list new projects and attract new token pairs to the platform; they help attract new investors who want to invest in new projects. Reverse pools also make it easier to for Flamingo to add more projects since listing a reverse pool has much lower demands than an FLM-generating pool.
In Flamingo's Invest module, users can find projects launching their token for public sale. A project has two buying options: a presale and a public sale.
To participate in a presale, users need to join a Tier and register for the project's presale. To join a Tier, users will need to lock up a designated number of FLM tokens. The Tier a user joins determines their weight of the presale (i.e. the number of tokens they can purchase).
Once the presale is over, users can buy any additional tokens not purchased during the presale. This is on a first-come, first-served basis.
Once the presale or public sale goes live, users can buy tokens during the sale period.
Users can claim any purchased tokens at any point once the project sale is over.
The Analytics module provides various data analytics on tokens and pools, such as current prices, liquidity, volume, and fees.
Through PolyNetwork, the Flamingo protocol is connected with various heterogeneous blockchain networks, such as Neo, Ethereum, and Ontology blockchains. Users on Flamingo can leverage its interoperability to gain access to more assets within the broader blockchain ecosystem. Designed as a clustered DeFi protocol, Flamingo innovatively integrates the liquidity pool and the collateral pool in Earn. In current AMM-based DEXs, liquidity providers' capital efficiency is limited by LP token uses, leading some AMMs to become underutilized and poorly provisioned. High collateralization ratios in synthetic systems also lead to similar issues when users deposit assets to mint synthetic tokens.
Liquidity providers of FLM trading pairs can stake their LP tokens into the Earn module. Under this mechanism, capital efficiency is more than doubled. Furthermore, liquidity providers can continue to use the synthetic stablecoin fUSDT. Through these mechanisms, Flamingo promises to deliver unprecedented capital efficiency and liquidity compared to isolated DeFi protocols. Flamingo will distribute FLM 100% based on contribution to the platform with 0% pre-mining or team reserve.
Flamingo aims to incentivize the broader community to participate in the Neo DeFi ecosystem. FLM is the project governance token and FLM holders can participate in governance through voting in DAO. As the project community successor, the Flamingo team contributes resources and presently governs the initial platform design to actuate the project at its early stage, to facilitate the long-term growth of the project.
FLM holders are responsible for governing the Flamingo project, which includes but is not limited to: tokenomics, parameter configuration, and functionality improvements/changes. Anyone can become an FLM holder and join the community to shape the future of Neo's DeFi ecosystem. Anyone can submit proposals in DAO and FLM holders are entitled to voting rights for relevant proposals.
There are two types of proposals:
- Proposers can submit proposals to improve the overall system design of Flamingo, such as liquidity improvement plans, liquidation mechanism, risk control strategies, and etc.
- FLM holders can decide the most important metrics of Flamingo as well as the release schedule of FLM. Examples of the metrics include but are not limited to:
- 1.FLM distribution mechanism
- 2.Staking token whitelist/distribution FLM distribution mechanism
Flamingo aims to become the stepping stone to accelerate Neo's DeFi ecosystem development. Flamingo’s commitment to DeFi will not stop at NEO. From lending to insurance and asset management, the potential is boundless. Flamingo’s design is still undergoing optimization, with questions ranging from how to introduce more external asset types, to native stablecoins, to exploring the NFT market space. As such, we welcome all community participants to proactively initiate proposals to further optimize Flamingo and build a more robust ecosystem.
Last modified 5mo ago