Dive Deep Into Protocols Space

DEXtory Dive deep into protocols space

Anton Bukov, 1inch.exchange Agenda Is this «DeFi» thing something new?

1. Orderbook-based approach from traditional finance 2. Liquidity-based (AMM) approach from DeFi 3. Impermanent Loss (IL) explained 4. Aggregation is the key Exchange Happens when demand meets supply

Selling! Buy!! #WTS #WTB! Sell Buy Price?     Want to sell! Want to buy! Limit orders vs Market orders Exchange happens where supply meets demand

• Makers create new limit orders • Takers ﬁll existing limit orders • Swap happens with exact price • Possible price slippage • Delayed execution • Instant execution On-chain vs Off-chain Something accessible and non-accessible within smart contract

• On-chain data is available within smart contract

• Oﬀ-chain data exists only outside of blockchain and should be passed in arguments Orderbook-based DEXes Makers create orders, takers ﬁll orders

1. EtherDelta.com (on-chain): • No on-chain market orders 2. 0x.org (off-chain): • 0x Relays (permissioned) • 0x Mesh (permissionless) 3. AirSwap.com (off-chain): • No partial fill orders • Only direct querying 4. Oasis.app: • On-chain market orders Orderbook-based DEXes Makers create orders, takers fill orders ETH-DAI 1. EtherDelta.com (on-chain): Price Asks Bids No on-chain market orders • 153 3 ETH 2. 0x.org (off-chain): 152 31 ETH 0x Relays (permissioned) • 151 13 ETH 0x Mesh (permissionless) • 150 5 ETH 3. AirSwap.com (off-chain): 149 20 ETH No partial fill orders • 148 11 ETH Only direct querying • 147 58 ETH 4. Oasis.app: 146 103 ETH On-chain market orders • 145 23 ETH Orderbook-based DEXes Makers create orders, takers fill orders ETH-DAI 1. EtherDelta.com (on-chain): • No on-chain market orders 2. 0x.org (off-chain): • 0x Relays (permissioned) • 0x Mesh (permissionless) 3. AirSwap.com (off-chain): • No partial fill orders • Only direct querying 4. Oasis.app: • On-chain market orders Orderbook-based DEXes Recap It’s almost the same as in traditional finance Liquidity-based DEXes Turn your portfolio into liquidity

1. Bancor.network: • BNT – token in the middle «Smart contract is 2. Uniswap.exchange: • Auto-rebalancing ETH-XXX an order Maker» 3. Balancer.finance: • Multi-dimensional Uniswap 4. Curve.fi: • Uniswap-like for stable coins Liquidity-based DEXes Turn your portfolio into liquidity DAI

~|~

DAI 1. Bancor.network: BNT ETH BNT ~|~ BNT • BNT – token in the middle BNT ETH ETH ~|~ ETH 2. Uniswap.exchange: MKR MKR • Auto-rebalancing ETH-XXX DAI 3. Balancer.finance: DAI SNX Multi-dimensional Uniswap BNT • DAI SNX 4. Curve.fi: MKR USDC USDT • Uniswap-like for stable coins ETH BNT Liquidity-based DEXes Turn your portfolio into liquidity

1. Bancor.network: • BNT – token in the middle 2. Uniswap.exchange: • Auto-rebalancing ETH-XXX 푅푒푠푒푟푣푒 퐵푎푙푎푛푐푒 푝푟푖푐푒 = 3. Balancer.finance: 푇표푡푎푙 푆푢푝푝푙푦 × 푅푒푠푒푟푣푒 푅푎푡푖표 • Multi-dimensional Uniswap 4. Curve.fi: • Uniswap-like for stable coins Liquidity-based DEXes Turn your portfolio into liquidity

1. Bancor.network: • BNT – token in the middle 2. Uniswap.exchange: ETH • Auto-rebalancing ETH-XXX MKR 3. Balancer.finance: • Multi-dimensional Uniswap 4. Curve.fi: 푥푦 = 푐표푛푠푡 • Uniswap-like for stable coins Liquidity-based DEXes Turn your portfolio into liquidity

1. Bancor.network: • BNT – token in the middle (a, b) 2. Uniswap.exchange:

• Auto-rebalancing ETH-XXX (c, d) 3. Balancer.finance: • Multi-dimensional Uniswap 4. Curve.fi: ab = cd • Uniswap-like for stable coins Liquidity-based DEXes Turn your portfolio into liquidity

1. Bancor.network: ETH • BNT – token in the middle BNT 2. Uniswap.exchange: • Auto-rebalancing ETH-XXX MKR 3. Balancer.finance: • Multi-dimensional Uniswap 푤푖 4. Curve.fi: ∏푥푖 = 푐표푛푠푡 • Uniswap-like for stable coins Liquidity-based DEXes Turn your portfolio into liquidity

1. Bancor.network: • BNT – token in the middle 2. Uniswap.exchange: • Auto-rebalancing ETH-XXX 3. Balancer.finance: • Multi-dimensional Uniswap ∑푥푖 푛 4. Curve.fi: ∏푥푖 = ( 푛 ) • Uniswap-like for stable coins Impermanent Loss (IL) Impermanent what?

30% • 1.25x price change = 0.6% loss 25% • 1.50x price change = 2.0% loss 20% • 1.75x price change = 3.8% loss 15% • 2x price change = 5.7% loss 10% • 3x price change = 13.4% loss 5% • 4x price change = 20.0% loss 1 2 3 4 5 2 k • 5x price change = 25.5% loss IL = − 1 1 + k Liquidity-based DEX Recap Sounds complicated? Aggregators Uniﬁes all the liquidity into single huge DEX

Uniswap

Swap input Guess Kyber Swap output How? …

Bancor Aggregators Pick best rate, isn’t it the best strategy?

Uniswap

1 Swap input Kyber 2 Swap output 3 …

Bancor Aggregators – 1inch.exchange Uniﬁes all the liquidity into single huge DEX

50% Uniswap … 2 1 30% Swap input Kyber 3 … Swap output 5 … 4 20% Bancor … The art of aggregation DEXes have different price and different liquidity Guess How? The art of aggregation DEXes have different price and different liquidity Isn’t it smart? The art of aggregation DEXes have different price and different liquidity

Best price Aggregators – 1inch.exchange Uniﬁes all the liquidity into single huge DEX

#Farm L2 #DeFi L1 L1 L2

L1 L1 L1

L2 L2 Aggregators Recap Ok, sounds reasonable ⚠ Attention! Thanks for your attention

Anton Bukov, @k06a Co-Founder and CTO of 1inch.exchange