Summary
Provide 3200 CVP (~10,000$) as a grant for the team from the Token Engineering community to build the cadCAD model of theBalancer AMM and run simulations for PowerIndex and similar use cases. Deliverables will cover documentation, code examples and video tutorials. The team includes members of the Token Engineering Community with a track record in token engineering: Angela Kreitenweis, Raul Martinez, and me - Vasily Sumanov.
This research proposal has already attracted a $25k grant from Balancer Labs for building a generalized model. The PowerPool grant will enable additional documentation and video tutorials to demonstrate the cadCAD workflow for various use case simulations, including PowerIndex.
The work that will be delivered to the community contains:
(1) open source model of generalized Balancer AMM
(2) cadCAD model based on Balancer AMM
(3) documentation, code examples, and video tutorials to simulate dynamic weights changing for PowerIndex, and additional use cases such as modeling LM programs, or reserve models necessary for staking tokens such as YFI
Motivation
Balancer constant invariant AMM is a widely used AMM model for various Defi use cases, including trading, AMM-based pools, portfolios and even voting systems. The Uniswap AMM is the basic example of generalized constant invariant as well.
Despite the widespread use of this model, there is still no generalized Python/cadCAD model for it. However, such models will significantly simplify the experience of product builders and allow them to design complex systems based on Balancer AMM.
PowerIndex is a perfect example of a complex and useful product built on top of Balancer AMM. It is a community-governed pool with 8 tokens, enabling meta-governance and vault strategies, and providing additional income for PIPT token holders (PIPT can be considered as the “BPT” token of this Balancer pool).
This pool is a complex system, which has two basic mechanisms to ensure its proper operation: dynamic weights changing model and the reserve model for staking tokens such as YFI. These two mechanisms are already implemented and audited, but still require to build a proper model to ensure robustness in case of huge TVL and unexpected behavior of involved agents. The generalized model of Balancer AMM is the fundament we need to simulate these edge cases and protect our community against negative side effects.
Additionally, such a model can contribute to the Defi ecosystem as a whole allowing developers and research teams to model their own cases and optimize Balancer pool configurations. Any DeFi project planning to implement (1) LM programs based on liquidity provision to Balancer pools, or (2) index AMM pools, or (3) AMM pools as a portfolio of assets will benefit from it.
Specificationstrong text
The final result of the project will be an open-source and Python/cadCAD model for Balancer AMM.The model will be completed with documentation, educational videos and code examples for several main use case simulations, including PowerIndex, available on Token Engineering Community Github.
Total project runtime November 2020 – March 2021.
Phase 1
end 12/2020 - derive core algorithms from Balancer smart contracts and build simple Python model, implementation in cadCAD
end 01/2021 - open source cadCAD model and documentation
Phase 2
end 02/2021 - run fundamental simulations based on 2-3 real-world use cases
(basic templates: LM program, LBP, index, weights changing model and reserve model, portfolio, etc)
end 03/2021 - produce and publish tutorials and documentation, demonstrate 2-3 simulation workflows including dynamic weights changing for PowerIndex
Angela Kreitenweis - Co-founder of TE Community and TE Academy (first-ever educational courses devoted to token engineering and token system design). One of the token engineering space community leaders since 2018. Contributor to various token engineering projects in TE community. TE YouTube
Raul Martinez - Co-Founder, CTO EthicHub. Implementing real-world economic use cases using dApps based on xDAI chain and Balancer AMM pools. Python, cadCAD implementation GitHub Gitlab Linkedin
Vasily Sumanov - early adopter and community researcher of PowerPool. Contributed to CVP token model and value creation patterns. Found an economic vulnerability in bZx token model, First Token Engineering Hackathon prize, early employee in Akropolis.