Surveying Poolz: An L3 Swapping Protocol for Boosting Liquidity Options in DeFi
The rising cryptoeconomy, and Ethereum in particular lately, is showing how assets in the future will be digital, and in extension, extremely liquid.
Accordingly, it’s fair to say that while we’re already seeing more and more innovations and milestones around liquidity in crypo than ever before, we’ve collectively only just begun to scratch the surface with how we can approach liquidity in this increasingly tokenized world.
In the interest of scratching deeper, as it were, the new Poolz project has stepped up to the plate.
Enter Poolz
Straightforward initial coin offerings, or ICOs, died off years ago.
Yet in 2020 we’ve seen a range of up-and-coming DeFi projects trial new kinds liquidity distribution events, like Initial DeFi Offerings. Recall how synthetic assets project UMA Protocol conducted an “Initial Uniswap Listing” for its UMA governance token back in the spring, for example.
Yet for all its merits, Uniswap and other traditional trading protocols in DeFi haven’t been custom tailored to facilitate liquidity distributions and auctions — Poolz has.
So What Is Poolz Exactly?
Poolz is a layer-3 swapping protocol, with L3 here referring to the fact that Poolz works above both Ethereum’s base and application layers. It’s also decentralized and trustless, meaning it’s not controlled by any central parties and can be used directly without the help of intermediaries.
As for what Poolz facilitates swapping for, that’d be early tokens from early DeFi projects, the protocol’s litepaper explains:
“Poolz is a … way of connecting early-stage blockchain-cryptocurrency innovators and investors. Its unified interface allows project owners to launch and manage liquidity auctions that are easily discoverable by investors on the platform.”
So there’s the elevator pitch. Poolz helps upstart DeFi enterprises and entrepreneurs connect with early-stage investors and bootstrap liquidity through user-friendly token auctions. On the flip side, these investors can use Poolz to easily identify promising new projects to back for the long-term.
Tackling a Growing DeFi Need
Simply put, DeFi is booming right now.
For instance, there’s now more than $20 billion worth of stablecoins in existence, and total monthly DEX volume blew past $23.5 billion last month. Activity in the sector is up across the board, and bullish traders and inspired builders are revving up alike.
That said, we’ve been seeing the conditions acutely ripening for bringing projects to market, but DeFi startups are still experimenting and trying to figure out innovative ways to distribute and bring liquidity to their tokens. That’s the big opportunity Poolz is aiming to tackle.
How Poolz Is Designed and Used
Poolz has a number of salient features and design points, including the following:
- The protocol is non-custodial, meaning users retain control of their assets at all times.
- Relying on the best of what the React JavaScript library has to offer, the Poolz UI is intuitive and familiar.
- Poolz also relies on homomorphic encryption to ensure risk-minimized decentralized trading.
Accordingly, the overall design of the protocol lends itself to a variety of use cases, such as:
- Liquidity bootstrapping (getting your token into the hands of a global community efficiently).
- Over-the-counter (OTC) trading.
- Yield farming (investors can provide liquidity to token auction pools).
- Non-fungible token (NFT) auctions.
The Pools of Poolz
Poolz token auctions are underpinned by liquidity pools.
The protocol lets users make “Created pools,” which are only accessible to holders of POZ, the native token of Poolz. In extension, there are “Open pools,” which, as their name suggests, are accessible to any Poolz user. The former charges a 0.15% fee on total liquidity raised, while the latter charges a 0.2% fee.
Going another step further, DeFi projects keen on auctioning their tokens through Poolz can leverage one of two specific pool formats: Direct Sales Pools (DSP) or Time-Locked Pools (TLP).
The DSP format lets investors receive auction tokens immediately after swapping into them. Conversely, the TLP format allows investors to receive their auction tokens only after the completion of a lock-in period. On this point, the project’s whitepaper adds:
“Poolz’s smart contract will also enable pool creators to define custom lock-in periods, thus releasing the swapped assets incrementally. For instance, say, disburse 40% of the swapped tokens immediately and, after say 1 month, the remaining 60% in 6-equal monthly vesting.”
Cross-Chain Infrastructure
Another one of the more interesting aspects of Poolz is that its planning to have a cross-chain (or as some would say, multi-chain) future.
Indeed, while the L3 swapping protocol has understandably started out its journey atop Ethereum, the project’s builders are planning to steadily integrate their tech with other top blockchains so that the Poolz ecosystem won’t be siloed but spread out and interoperable across swathes of the cryptoeconomy.
Providing Poolz Liquidity
Let’s say you’re interested in providing liquidity on Poolz. How would it work?
Well since Poolz is designed as a marketplace, first you’d navigate to its UI and start browsing the platform for notable opportunities. Once you find one that piques your interest, the next step’s as simple as pressing the dashboard’s “Join” button. Setup your desired parameters and confirm as needed, and you’ll be in. It’s worth noting here that Poolz liquidity providers earn pro-rata swapping rewards, which are disbursed every four hours, for their services.
Inside the POZ Token
POZ, which will have a total supply of 5 million, is the token at the heart of the Poolz project. First and foremost, the token can be used by holders to collectively govern the Poolz protocol in a decentralized manner.
“The Poolz platform will implement a regular Proof of Stake (PoS) consensus mechanism, enabling POZ holders to gain voting rights by staking their tokens is designated wallets,” the project’s builders have explained previously.
This dynamic paves the way to the stakeholders of Poolz deciding for themselves on the project’s key parameters, e.g. fees. Yet beyond governance, Poolz will also employ a separate staking system where users can stake Poolz LP tokens in order to earn POZ rewards. 1.75 million POZ have been set aside for the lifetime of these staking rewards.
The NFT Angle
Behind DeFi, one of the hottest sectors in the cryptoconomy right now is the NFT arena where we’re seeing media lego projects start to come alive like never before.
That’s why another one of the more intriguing elements of Poolz is how the protocol is embracing NFTs, like via the ERC-721 standard, and this opens up all kinds of promising opportunities for NFT users like dynamic ratio auctions and beyond.
Of course, we’ll have to wait and see what creators and innovators cook up with this system, but if Poolz can really ramp up from here then expect to see more creative NFT forays facilitated by the protocol.
Poolz’s Roadmap
Q4 2020 is all about bringing Poolz into the limelight with things like pre-listing POZ and DEX listings. This period also bears witness to the creation of the first pools and swaps on Poolz.
Then in Q1 2021, the project is doubling down on extending the Poolz ecosystem by integrating cross-chain swaps, ERC-721 tokens, bid auctions, and more. We’ll also see the launch of Poolz governance and POZ staking during this timeframe.
In the meantime, it’ll be interesting to watch where Poolz goes from here. The project has the makings of a promising upstart DeFi protocol, but only time will tell if the Poolz vision will fully come to fruition.
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OhNoCryptocurrency via https://www.ohnocrypto.com/ @William M. Peaster, @Khareem Sudlow