764k yPool
127k sPool
| [613k](https://etherscan.io/tx/0xd619dde4f13c833ead6010485dfe9fd038f70880399013ab05d4ff551ee6d7a7) | [77k](https://rinkeby.etherscan.io/tx/0x52d2c21fa183d6426ff7ac4e1a066e8426b351079a64139abf029d07f80cb736) | | Swap fee | 0.3% | 0.04% | 0.06% | 0.04% | | Interest earning | no |yes (yPool)
no (sPool)
| yes | yes | | Anytime swap | yes | yes | no | yes | | #of tokens in a pool | 2 | 4 | 4 | unlimited | ## Next Step To use Smoothy, please visit [app.smoothy.finance](http://app.smoothy.finance). To learn more details about Smoothy, please visit BASICS section. To understand more advanced topics of Smoothy, please visit ADVANCE section. To join smoothy community, please visit [discord](https://discord.com/invite/8zFZXtx) or [telegram](https://t.me/Smoothy_finance). # Introduction Due to the explosive growth of DeFi, multiple assets were introduced into the Ethereum network as anchor coins, such as BTC, USD, and GOLD. At present, there are more than 20 asset-backed tokens in the current market, multiple among which are backed by the same assets. In the future, more tokens that are effectively backed by the same underlying assets are expected to be introduced into the network. Theoretically, the swap ratio between these tokens should be 1:1 given that they are effectively backed by the same underlying assets. However, for the current DEX in the market, this fundamental point was not fully considered when designing the exchange protocol, thereby causing unnecessary high costs for users because of the slippage. Thus, a better-designed product that specializes in the assets that are effectively backed by the same underlying assets is urgently needed in the market. Curve.fi and mStable are the two representative products that are dedicated to swapping tokens effectively backed by the same underlying assets (such as stablecoins). Curve.fi uses StableSwap protocol utilizing an invariant as a combination of constant-product (Uniswap) and constant-sum invariants. It achieves great success by providing low-slippage swap compared to Uniswap. However, due to the mathematical complication of StableSwap curves, a pool in curve.fi supports only up to 4 assets - meaning that to support more assets, it has to open more pools (10+ pools) with some assets spreading over multiple pools (such as DAI, USDC). The disperse of the asset in multiple pools greatly reduces liquidity and thus increases slippage.  mStable offers a single pool solution and offers 1:1 swap as long as the percentages of the tokens are below the predefined weights. However, it lacks flexibility, where a swap is prohibited a percentage of token exceeds a predefined weight. Further, it incurs a high cost for swapping mainly because of the high gas fee by withdrawing/depositing tokens in the underlying interest-earning protocols (Compound/AAVE).  Smoothy has been developed from scratch to address the issues of existing protocols. Smoothy's goal is to offer one pool to swap all tokens with * Simple and smooth swap * Extremely low gas fee * Flexibility to add/remove any stablecoins * Better liquidity/lower slippage and better LP token incentives # Smooth Swap Smoothy implements a simple and efficient swap that supports a long list of assets in the pool. For each token in the pool, it has two swap parameters * Soft weight - the highest percentage of the token until it becomes unbalanced (imposing penalty); * Hard weight - the percentage of a token should never exceed, which should be equal to or greater than soft weight. For any swap that results in percentage changes of the tokens in the pool, as long as the percentages fall into the range of soft weights of the swapped tokens, then 1:1 ratio swap is guaranteed. Otherwise, a penalty will be imposed for the swap. **Example A (Swap without Penalty)**: Suppose the pool has 120M USDC / 80M USDT and the soft weights of USDC and USDT are 60%, 60% respectively. A user can swap 10M USDT for 10M USDC as the resulting percentages of USDC/USDT are \[55%, 45%], which fall into the soft weight range. **Example B (Swap with Penalty)**: Suppose the pool has 120M USDC / 80M USDT and the soft weights of USDC and USDT are 60%, 60% respectively. A user wants to swap 10M USDC for USDT. However, since the resulting percentage of USDC > 60%, the user will get < 10M USDT. Note that the penalty fee will be evenly distributed to LPs, in order to compensate them for the risk of holding the excess asset in the (post-swap) pool. ## **Penalty Calculation** The penalty is using a bonding curve, where the penalty increases (and thus the price of returned token increases) as the percentage of a token increases.  The detailed idea behind the bonding curve can be found [here](https://smoothy-finance.medium.com/boding-curve-for-swapping-stablecoins-ec9586b903f2). # Gas Fee Optimization One important benefit of Smoothy's swap protocol using soft/hard weights and bonding curve is that * Swapping two tokens will only need to perform calculation on two tokens (including penalty), which greatly saves computational cost; and * The gas cost of the swapping will not increase as the token list in the pool grow longer. By contrast, to compute the number of returned tokens, Curve.fi has to jointly compute the invariant using the percentages data from all tokens. This results in * More gas in data read as the list of tokens in the pool grows; and * More gas in computation as the list of tokens in the pool grows. The following figure summarizes the comparison of the gas fees:  # Flexibility to Add/Remove Token With Smoothy's gas fee optimization, Smoothy is able to dynamically add or remove a token in the pool. In contrast, Curve.fi currently supports up to 4 tokens in the pool, and to support new tokens, Curve.fi has to create new pools, which results in greater gas cost and lower liquidity. Smoothy's dynamic token addition/removal feature brings great flexibility to support new tokens with extremely low gas cost.   # Maximizing LP Token Incentives The liquidity providers (LPs) in a pool can generally receive basic token incentives in two parts: * Trading fee from users who wish to perform swaps; and/or * Additional reward from the third-party interest-earning protocols (such as Compound/AAVE). However, the drawback of supporting the rewards from the third-party interest-earning protocol is that significant gas is incurred by moving the tokens to/from the protocols. To address such concerns, Curve.fi offers the pools for liquidity providers (LPs) with and without participation in third-party interest-earning protocols at the cost of lower liquidity.  ## Dynamic Cash Reserve Algorithm Smoothy addresses the concerns by using a dynamic cash reserve (DCR) algorithm. The basic idea is that Smoothy will reserve about 10% of the token as cash in the pool and deposit the rest 90% into the third-party interest-earning protocols. If a swap results in * The cash reserve is greater than 20%; or * There is insufficient cash reserve to complete the swap Smoothy will perform a rebalance so that * If the cash reserve is greater than 20% of the token, 10% will be retained as cash, and the rest of the cash reserve is deposited into the underlying protocol to earn interest; or * If the cash reserve is insufficient to complete the swap, extra tokens are withdrawn from the underlying protocol so that 10% of the token becomes reserved cash after the swap. As a result, if as long as the swap does not trigger a rebalance event, the gas cost of the swap can be extremely low by moving reserved cash owned by Smoothy and bypassing gas costly withdrawal/deposit operations of underlying protocols.  By putting 90% (expected) of the tokens into the third-party interest-earning protocol, the LPs of Smoothy can maximize their token incentives by * Trading fee (including swap fee/penalty fee); and * Interest earned from the third-party protocols; and * Penalty fee incurred by slippage.  # SMTY Token Functionality \ The native digital cryptographically-secured utility token of Smoothy (**SMTY**) is a transferable representation of attributed functions specified in the protocol/code of Smoothy, and which is designed to be used solely as an interoperable utility token on the network. SMTY is a non-refundable functional utility token which will be used as the economic incentives which will be distributed to encourage users to contribute and maintain the ecosystem on Smoothy, thereby creating a win-win system where every participant is fairly compensated for its efforts. SMTY is an integral and indispensable part of Smoothy, because without SMTY, there would be no incentive for users to expend resources to participate in activities or provide services for the benefit of the entire ecosystem on Smoothy. Given that additional SMTY will be awarded to a user based only on its actual usage, activity and contribution on Smoothy, users of Smoothy and/or holders of SMTY which did not actively participate will not receive any SMTY incentives. To develop a self-sustainable, closed-loop economy, all the fees (e.g. trading fees, interest fees, penalty fees) collected by the network would be re-distributed as incentives for active contributors within the ecosystem. SMTY does not in any way represent any shareholding, participation, right, title, or interest in the Company, the Distributor, their respective affiliates, or any other company, enterprise or undertaking, nor will SMTY entitle token holders to any promise of fees, dividends, revenue, profits or investment returns, and are not intended to constitute securities in Singapore or any relevant jurisdiction. SMTY may only be utilised on Smoothy, and ownership of SMTY carries no rights, express or implied, other than the right to use SMTY as a means to enable usage of and interaction within Smoothy. For Smoothy to function properly, users would need to be incentivised to play the role of liquidity providers and stake their digital assets into the market-making pools. As compensation for opportunity costs as well as impermanent losses, these liquidity providers which help to promote adoption of Smoothy by staking or including assets to liquidity pools in exchange for LP tokens would be rewarded with SMTY tokens (i.e. liquidity "mining" on Smoothy), according to each user's relative contribution. It is anticipated that the community of SMTY holders would comprise a diverse field of developers, professionals and supporters of the project to develop Smoothy (including without limitation experts in software development, blockchain technology, cryptography, artificial intelligence, law or finance), which will be able to share and exchange balanced views on the overall direction of the project. In order to promote community governance for the network, SMTY would allow holders to propose and vote on governance proposals to determine features and/or parameters of Smoothy as well as protocol improvements, with voting weight calculated in proportion to their token holdings. For example, some critical parameters subject to voting include: * Adding new stablecoin and its "ytoken" * Adjusting soft and hard weights of a stablecoin * Adjusting the protocol fee structure of Smoothy For the avoidance of doubt, the right to vote is restricted solely to voting on features of Smoothy and/or changes to the governance process; the right to vote does not entitle SMTY holders to vote on the operation and management of the Company, its affiliates, or their assets, and does not constitute any equity interest in any of these entities. Smoothy is not intended to be any form of joint venture or partnership. The emission schedule of SMTY is TBD. In particular, it is highlighted that SMTY: (a) does not have any tangible or physical manifestation, and does not have any intrinsic value (nor does any person make any representation or give any commitment as to its value); (b) is non-refundable and cannot be exchanged for cash (or its equivalent value in any other digital asset) or any payment obligation by the Company, the Distributor or any of their respective affiliates; (c) does not represent or confer on the token holder any right of any form with respect to the Company, the Distributor (or any of their respective affiliates), or its revenues or assets, including without limitation any right to receive future dividends, revenue, shares, ownership right or stake, share or security, any voting, distribution, redemption, liquidation, proprietary (including all forms of intellectual property or licence rights), right to receive accounts, financial statements or other financial data, the right to requisition or participate in shareholder meetings, the right to nominate a director, or other financial or legal rights or equivalent rights, or intellectual property rights or any other form of participation in or relating to Smoothy, the Company, the Distributor and/or their service providers; (d) is not intended to represent any rights under a contract for differences or under any other contract the purpose or pretended purpose of which is to secure a profit or avoid a loss; (e) is not intended to be a representation of money (including electronic money), security, commodity, bond, debt instrument, unit in a collective investment scheme or any other kind of financial instrument or investment; (f) is not a loan to the Company, the Distributor or any of their respective affiliates, is not intended to represent a debt owed by the Company, the Distributor or any of their respective affiliates, and there is no expectation of profit; and (g) does not provide the token holder with any ownership or other interest in the Company, the Distributor or any of their respective affiliates. Notwithstanding the SMTY distribution, users have no economic or legal right over or beneficial interest in the assets of the Company, the Distributor, or any of their affiliates after the token distribution. # Parameters ## Soft and hard weights * USDC: 55%, 100% * DAI: 55%, 100% * USDT: 55%, 100% * TUSD: 20%, 40% * BUSD: 20%, 40% * sUSD: 20%, 40% * PAX: 5%, 10% * GUSD: 5%, 10% ## Contracts * Smoothy contract: [0xe5859f4efc09027a9b718781dcb2c6910cac6e91](https://etherscan.io/address/0xe5859f4efc09027a9b718781dcb2c6910cac6e91) * Timelock contract: [0xa13c1A5fdFBBe60a71a2c1822de97000EC8e4079](https://etherscan.io/address/0xa13c1a5fdfbbe60a71a2c1822de97000ec8e4079) * Timelock delay: 48 hours * SMTY token contract: TBD # Virtual Price ## Definition Virtual price is defined as *virtualPrice = totalAssetBalance / totalLpSupply* where totalAssetBalance is the summation of all balances of underlying assets and totalLpSupply is the total supply of LP tokens. **Example A (Virtual Price Calculation):** Suppose the pool has two stablecoins USDT/USDC with balances \[1M, 1M] and the total supply of syUSD (LP token) is 1.5M, then the virtual price is (1M + 1M) / 1.5M = 1.3333. ## Virtual Price as Exchange Rate For any pool operations that converts LP token from/to underlying asset (e.g., mint syUSD with USDT or redeem syUSD for USDC), virtual price is essential the **exchange rate** between the LP token and underlying asset **if no penalty (e.g., slippage cost) happens**. **Example B (Redeem without Penalty)**: Suppose the pool has two stablecoins USDT/USDC with balances \[1M, 1M], total supply of syUSD (LP token) is 1.5M, and soft weights are \[0.6, 0.6]. Redeeming **0.1M** **syUSD** for USDC will not incur a penalty (as the resulting percentages are \[0.5263, 0.47368]), and as a result, the pool will return **0.13333M** **USDC** for the redemption (virtual\_price = 1.3333). **Example C (Redeem with Penalty):** Suppose the pool has two stablecoins USDT/USDC with balances \[1M, 1M], total supply of syUSD (LP token) is 1.5M, and soft weights are \[0.6, 0.6]. Redeeming **0.5M** syUSD for USDC will incur a penalty (as the resulting percentages will exceed 0.6), and as a result, the pool will return **less than 0.6667M USDC** for the redemption (virtual\_price = 1.3333). One common mistake in calculating virtual price is to use the exchange rate of a transaction as virtual price, which is incorrect if such a transaction incurs a penalty. ## Virtual Price Property One key property of virtual price is that the value should **be non-decreasing** to reflect the accumulated interest + swap fee + penalty fee, i.e., the value of per LP token is self-value-accrued over time by earning interest + swap fee + penalty fee automatically. **Example D (Virtual Price with Fee):** Suppose the pool has two stablecoins USDT/USDC with balances \[1M, 1M], total supply of syUSD (LP token) is 1.5M. Suppose a user swaps 0.1M USDT for 0.09M USDC, the resulting pool becomes \[1.1M, 0.91M], and thus the virtual price increases from 1.3333 to 1.34. **Example F (Virtual Price with Interest)**: Suppose the pool has two stablecoins USDT/USDC with balances \[1M, 1M], total supply of syUSD (LP token) is 1.5M. After some time, the pool earns interests \[0.1M, 0.15M] respectively. As a result, the virtual price increases from 1.3333 to 1.5. # Math # Risks \ You acknowledge and agree that there are numerous risks associated with acquiring SMTY, holding SMTY, and using SMTY for participation in Smoothy. In the worst scenario, this could lead to the loss of all or part of SMTY held. **IF YOU DECIDE TO ACQUIRE SMTY, YOU EXPRESSLY ACKNOWLEDGE, ACCEPT AND ASSUME THE FOLLOWING RISKS:** * Uncertain Regulations and Enforcement Actions The regulatory status of SMTY and distributed ledger technology is unclear or unsettled in many jurisdictions. The regulation of digital assets has become a primary target of regulation in all major countries in the world. It is impossible to predict how, when or whether regulatory agencies may apply existing regulations or create new regulations with respect to such technology and its applications, including SMTY and/or Smoothy. Regulatory actions could negatively impact SMTY and/or Smoothy in various ways. The Company, the Distributor (or their respective affiliates) may cease operations in a jurisdiction in the event that regulatory actions, or changes to law or regulation, make it illegal to operate in such jurisdiction, or commercially undesirable to obtain the necessary regulatory approval(s) to operate in such jurisdiction. After consulting with a wide range of legal advisors to mitigate the legal risks as much as possible, the Company and Distributor have worked with the specialist blockchain department at Bayfront Law LLC and obtained a legal opinion on the token distribution, and will be conducting business in accordance with the prevailing market practice. * Inadequate disclosure of information As at the date hereof, Smoothy is still under development and its design concepts, consensus mechanisms, algorithms, codes, and other technical details and parameters may be constantly and frequently updated and changed. Although this token documentation contains the most current information relating to Smoothy, it is not absolutely complete and may still be adjusted and updated by the Smoothy team from time to time. The Smoothy team has no ability and obligation to keep holders of SMTY informed of every detail (including development progress and expected milestones) regarding the project to develop Smoothy, hence insufficient information disclosure is inevitable and reasonable. * Competitors Various types of decentralised applications and networks are emerging at a rapid rate, and the industry is increasingly competitive. It is possible that alternative networks could be established that utilise the same or similar code and protocol underlying SMTY and/or Smoothy and attempt to re-create similar facilities. Smoothy may be required to compete with these alternative networks, which could negatively impact SMTY and/or Smoothy. * Loss of Talent The development of Smoothy greatly depends on the continued co-operation of the existing technical team and expert consultants, who are highly knowledgeable and experienced in their respective sectors. The loss of any member may adversely affect Smoothy or its future development. Further, stability and cohesion within the team is critical to the overall development of Smoothy. There is the possibility that conflict within the team and/or departure of core personnel may occur, resulting in negative influence on the project in the future. * Failure to develop There is the risk that the development of Smoothy will not be executed or implemented as planned, for a variety of reasons, including without limitation the event of a decline in the prices of any digital asset, virtual currency or SMTY, unforeseen technical difficulties, and shortage of development funds for activities. * Security weaknesses Hackers or other malicious groups or organisations may attempt to interfere with SMTY and/or Smoothy in a variety of ways, including, but not limited to, malware attacks, denial of service attacks, consensus-based attacks, Sybil attacks, smurfing and spoofing. Furthermore, there is a risk that a third party or a member of the Company, the Distributor or their respective affiliates may intentionally or unintentionally introduce weaknesses into the core infrastructure of SMTY and/or Smoothy, which could negatively affect SMTY and/or Smoothy. Further, the future of cryptography and security innovations are highly unpredictable and advances in cryptography, or technical advances (including without limitation development of quantum computing), could present unknown risks to SMTY and/or Smoothy by rendering ineffective the cryptographic consensus mechanism that underpins that blockchain protocol. * Other risks In addition, the potential risks briefly mentioned above are not exhaustive and there are other risks (as more particularly set out in the Terms and Conditions) associated with your acquisition of, holding and use of SMTY, including those that the Company or the Distributor cannot anticipate. Such risks may further materialise as unanticipated variations or combinations of the aforementioned risks. You should conduct full due diligence on the Company, the Distributor, their respective affiliates, and the Smoothy team, as well as understand the overall framework, mission and vision for Smoothy prior to acquiring SMTY.