changed 5 years ago  
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Gusoku: Options-based IL protection

Goal

Deliver impermanent loss protection to Eth/Stablecoin liquidity providers of AMMs in an automated and transparent fashion using options. This video captures the idea we want to automate in a smart contract.

Options Warchest Contract

  1. User deposits
    • Routing % into Eth/Stable pool vs. what % to keep in warchest.
    • Pause additional deposits if coverage percent drops below 100% and/or we can't source more options to buy.
  2. Purchase options
    • Aggregate option purchases – how much coverage do we need per deposit amount.
    • Cap price willing to pay.
  3. Exercise options
    • When close to expiry and profitable.
  4. User withdrawal
    • Track each user's entry price in pool to determine payout (if IL suffered) on withdrawal.
  5. Tax profits of eth/stable pool
    • As options expire out-of-the-money the warchest will deplete. Need on-going ability to tax profits in Eth/Stable pool to purchase new options.

#3,4,7 will need to be triggered either via Keep3r or incentivized users.

Options Protocols

Compensation

3 month timeline. Estimate 2 months of full-time effort * $150k/year = $25k per developer. To better align incentives we propose taking 1/2 in grants and join in the upside.

  • Grant: $25k USD (1/2 at start, 1/2 on delivery for audit)
  • Fee Split: a % of protected pool profits to be split 50/50 between devs and Sushi Community.

Benefits to devs: SushiSwap will give us exposure to a large liquidity pool at launch, cover audits, 50% of fees, and grants.
Benefits to Sushi Community: We are unaware of another project that does this so exclusive for SushiSwap LPs and potentially bring in more liquidity. 50% of fees.

Spitballing

$150 million locked in SushiSwap Stable pools. If we convert 5% => $7.5 million deposited into warchest => need source cover for $3.75 million ETH. According to https://pools.vision/ over 7 days people are averaging ~1% return in those sushi pools => $75k/week profit. Options were costing ~25% => ~$55k/week in profit. We suggest an additional 5% fee ($2,750 in this example) on pool profits to be split between us/Sushi each week.

Developers MultiSig Wallet Address to receive Grant and Fees

0xCBCb4B066E9a5CCB66B290D9F2E3E894Da785Bd5

Milestones

  1. Abstract and aggregate options from multiple protocols (2 weeks)
  2. Options warchest MVP (1 month)
  3. Options warchest v1 (1 month)
  4. Implement Keep3r or incentivize users to trigger options buying/exercising/pool taxing (2 weeks)

Developers Introductions

Kami Ebisu

Hello, everyone from the SushiSwap community! I'm Kami Ebisu, and I've decided to remain anonymous because I believe privacy is a fundamental right everyone should exercise, especially on times when large corporations try to control and sell every bit of personal data that they can. And also because I think people should not be valued based on their looks, gender, or hobbies, but on the quality of work they can produce.

I have experience with data science, full-stack web development, and smart-contracts. I'm attracted to the world of blockchains, decentralized storage, and P2P in general because I envision building and living in a utopia where people are free from the shackles and prying eyes of governments and large corporations. Where we can create, build, make our ideas come alive without interruptions or worries about censorship.

By building Gusoku, I expect to contribute to the further development of the SushiSwap ecosystem, one who has the potential to keep innovating on giving users control over their money and investments, exploring areas and opportunities others are too afraid or hesitant to explore.

Kami Ebisu's Socials

Shunmyo

Hello SushiSwap community! I'm a software engineer (10+ years experience) who has been dabbling in cryptocurrency since 2014 and hacked at a number of Eth Global events (3 prizes awarded). I'm drawn to what an open, decentralized financial system can mean for the world and defi has really become my passion over the last year. I'm an LP in a few different protocols and Gusoku would directly scratch an itch I have.

Shunmyo's Socials
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