UmiProtocol

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Problem Statement

One problem with the existing AMM is that users lose money due to slippage when swapping and impermanent losses when providing liquidity. Another problem on the DEX side is the lack of effective use of liquidity. Although the major DEXs show off their huge TVLs on their websites, only a small percentage of the deposits are actually used for swapping, and as a result, the yield is only 6%. Considering that the yield on the 10-year US Treasury note is 4%, the return is clearly not commensurate with the risk taken. Another problem is that the liquidity provision process is complicated and not user-friendly.Unraveling the aforementioned problems, slippage is caused by the fact that the deposited liquidity is spread over a wide price range. This is due to the use of constant-product curves such as those used in Uniswap for swaps; Umi uses three bonding curves, depending on the situation, to keep slippage as small as possible. Next, an impermanent loss can be described as a loss during rebalancing. Rebalancing itself is not a problem, but the problem is that in the existing AMMs it is done only once when the user redeems their LP tokens. In addition, the liquidity pool deviates slightly from the ideal balance from time to time due to user swaps and changes in market prices, and Umi aims to constantly track the ideal pool balance according to market trading volume by constantly rebalancing the pool, thereby avoiding impermanent losses in principle. The goal is to achieve this. Finally, Umi will introduce an LP token called ULP, which will make it easy to provide liquidity by simply swapping ULPs and assets such as ETH.Umi's automatic concentrated liquidity algorithm will fundamentally solve losses due to slippage and impermanent losses, and ULPs will provide user-friendly liquidity provisions.Umi also has a swap aggregator and asset profiler that allow users to do everything with Umi alone, rather than visiting each protocol on the chain.

Solution

We use Polygon, Chainlink, and The Graph to implement Umi.Polygon is where we deploy our contracts.Chainlink is used to fetch oracles, which we use to track the market portfolio of our liquidity pool and to offer them to our users at market prices during swaps.The Graph is used to efficiently retrieve data on the chain. Swap aggregators and asset profilers need to fetch a lot of data on the chain, and The Graph answers that request.