General FAQ
Mercurity.Finance is an open DeFi platform powered by swap, allowing LP tokens to be reused across multiple protocols to maximize yield.
The Mercurity.Finance open DeFi platform roadmap includes a number of protocols, with each sub-protocol independent of the others, easily integrated, flexible, and synergistic with the other protocols.
Mercurity Swap Protocol - Whitepaper
Mercurity Lend Protocol (coming soon)
Mercurity Insurance Protocol (coming soon)
Mercurity Synthetic Assets Protocol (coming soon)
The fund utilization rate measures the percentage of liquidity pool contributions that are utilized to earn a return. If TVL for a liquidity pool is $200mm, and $150mm in pair tokens have been staked to lend, then fund utilization = 75% (= $150mm / $200mm)
For example, when a bank absorbs 10 billion USD in deposits and provides 7 billion USD in loans, the fund utilization rate is 70%. The bank needs to pay interest on deposits for 10 billion, which is the bank’s cost, and the benefit is from the interest on 7 billion loan.
In order to earn returns, funds must be utilized. On Uniswap, transaction fees are generated only when liquidity pool funds are traded. If, on a given day, trading volume is 10% of TVL, then 90% of funds were not “utilized” and therefore did not contribute to earnings.
Mercurity Finance provides multiple opportunities to utilize funds via LP Pair Tokens. LPs are issued Pair Tokens equal to the liquidity provided. These tokens represent liquidity that is locked (i.e., secured) which can therefore be utilized to earn via:
pledged for loans (earn interest income) or insurance (earn premiums).
Banks are allowed to lend more money than they hold in deposits. Therefore it is common for banks to have utilization ratios far higher than 100%.
It means that the current design of SWAP deviates from the original intention, and it is difficult to create a high return for customers. The return on the yield farming model is not sustainable.
Uniswap, with such a low amount of funds, has high profits. This is entirely because of mining. Therefore, the current high returns can only be short-term, not sustainable.
Mercurity will provide multiple protocols in which LP Tokens can be used to generate earnings. For example, LPs can “re-use” LP Tokens, for the second time, to earn underwriting income via the insurance protocol.Other available protocols include:
LP Token-pledge lending and LP Token synthetic assets. All Mercruity protocols “re-use” LP Tokens.
Impermanent loss is the difference in value between holding tokens in AMM and holding tokens in your own wallet. Impermanent loss occurs when the relative value of the two sides of a liquidity pair changes — i.e. the price of one relative to the other increases / decreases.
The greater the deviation, the greater the impermanent loss. Impermanent loss is realized when liquidity is removed. See this video and article for a more in depth explanation.
One strategy to avoid impermanent loss is to remove liquidity at the same relative price at which it was added. This strategy is only recommended for experienced DeFi LPs.
A second strategy is to only participate in pools with mirrored assets — i.e. the price ration will always be 1:1 and no impermanent loss will be realized. E.g., USDC/USDT, WBTC/RENBTC
Mercurity provides a third and a fourth mechanism to avoid impermanent loss. Third, LPs on Mercurity Finance can purchase impermanent loss insurance, and fourth, they can act as liquidity lenders to enjoy the benefits of liquidity without bearing impermanent losses.
Mercurity has devised two unique methods for LPs to avoid impermanent loss:
Purchase Impermanent loss insurance. (When you become a liquidity provider, you can put the LP Token in the insurance vault. If there is an impermanent loss when liquidity is removed, Mercurity will pay 70% of the loss)
Become a liquidity lender. When an LP lends digital currency to others:
The borrower must return the same amount of digital currency, at the agreed-upon time.
Upon loan repayment, the borrower receives a share of the transaction fee. Lenders do not need to bear the impermanent loss.
In DeFI, An exchange traded fund (ETF) is a collection of digital assets held in a fixed proportion that can be traded on a secondary market.Every Mercurity Finance fund has a GP and at least one LP. GP is the manager and LP is the funder (liquidity provider).
The GP determines the time and rate of fund trading. LPs can only share profits and do not have decision-making authority.
Most trading funds are open-end funds, and a few are closed-end funds. Open-end funds have no LP selection requirements — anyone can become an LP. For closed-end funds, funders must be permissioned by the Owner / GP.
In the Mercurity Finance model, Uniswap would be considered an ETF that provides liquidity, and Uniswap itself would be considered a GP.
Uniswap liquidity pool transaction fees are fixed, and the liquidity pool Owner does not have the authority to set or adjust pricing. Mercurity provides significantly greater operational autonomy, empowering GPs to set fee rates.
Each liquidity pool on Uniswap has LPs, but none have GPs. Uniswap determines the fee rate and directly shares transaction fees with LPs. Uniswap itself is more like an ETF, and itself acts as GP.
Uniswap itself is an ETF, and Mercurity Swap is an ETF infrastructure.
The Uniswap liquidity pool allocates transaction fees based on actual LP contribution, overlooking creators of the liquidity pool, early liquidity providers, and non-funded management and marketing contributors, such as KOLs. Uniswap is like an ETF without a GP. Uniswap’s model is like a fund with no GP, lacking incentives for non-financing contributors and not conducive to attracting community resources.
Mercurity classifies liquidity pool contributors into GP (General Partner) and LP (Liquidity Provider), and GPs are the managers of liquidity pools. GPs who create liquidity pools are managing partners, while other GPs, such as KOL, are general partners.
As Mercurity empowers community autonomy to liquidity pools, each liquidity pool is like a fund, and Mercurity becomes the infrastructure of the fund, providing an infrastructure network ecosystem for everyone to create and operate the fund.
Summary: 1. Mercurity makes each liquidity pool a fund
2. Mercurity empowers each liquidity pool with community autonomy. (Pair Token represents the governance right of community)
In addition to the two biggest differences above, there are also:
Mercurity is a DeFi protocol matrix, which has agreements with SWAP, insurance and other financial services.
The Mercurity protocol is composed of a matrix of several sub-protocols. Synergy between sub-protocols can create unique value.
Mercurity encourages all users to create and independently manage their own liquidity pools, making liquidity pools be customizable and community-autonomous. Liquidity is merged from various pools. Liquidity pools with the same trading pair are connected by Mercurity through an on-chain smart order routing that automatically finds the best price across all pools on Mercurity.
Pair Token represents the governance right of the liquidity pool. With Mercurity empowering the community of each liquidity pool, the community needs its own tokens for community autonomy.
Community votes to determine which liquidity pool adopts multiple farming rewards. Single rewards are the default and do not require any vote
After providing liquidity, liquidity providers can use LP Token to participate in other protocols, including lending and insurance, to reuse assets and get two rev-share opportunities and two farming opportunities.
Each DEX has an independent governance token and is autonomous by the community.
Each liquidity pool has an independent community, with an independent Pair Token, to realize the community governance on the liquidity pool community and mobilize the power of the flow pool community.
The Mercurity platform token serves as the governance token for the platform ecosystem and supports DEX liquidity and transaction growth.
Mercurity, with its incentives of platform token, DEX governance token, and liquidity pool Pair Token, provides users a compound incentive, winning other DEXs on yield.
While traders on DEXs bear higher gas fees and potentially larger price slippages than on CEXs, platforms like Uniswap do not compensate traders.
Mercurity considers traders to a community as important as liquidity providers, and incentivizes traders so that they are mining when trade.
On Mercurity, the Pair Token is the governance token for each liquidity pool. Pair Token facilitates the liquidity providers in each pool to organize sub-communities that have autonomy over the future development of the liquidity pool.Pair Token also determines the distribution of MEEs (Mercurity’s platform governance tokens).
The Pair Token is an ERC-20 Token that can be freely transferred and traded.
The LP token, or the liquidity provider token, can be used as a proof that the liquidity provider stores the token in the smart contract. Whenever new funds are deposited in the liquidity pool, the liquidity provider (LP) will receive a certain amount of LP tokens, which represents the provider’s share of the total funds in the liquidity pool.
Firstly, liquidity pool certification is not mandatory, but an optional service on Mercurity. Uniswap, Sushiswap, Balancer and Curve are completely decentralized, but they still have many fraudulent tokens. Users are trying to distinguish between fraudulent tokens and legitimate tokens. The authenticated liquidity pool has authentic tokens that have been reviewed, and the pool is marked with a ‘V’ symbol.
You can use LP tokens from Uniswa, SushiSwap, Balancer, Curve on Mercurity to earn MEE tokens. If the liquidity provider (LP) has been receiving rewards through other swap agreements, pleading LP Tokens on Mercurity can help LP earn profits from three places.
At the end of the LP token pledging, we will migrate all LP tokens on the Mercurity protocol. The migration will transfer all LP tokens on Uniswap and Balancer to Mercurity to redeem each token pair on these platforms. The migration will also use these LP tokens to start the liquidity pool, which is almost the same as the liquidity pool on Uniswap and Balancer, but with more features. All fees collected are distributed to MEE holders.
After the migration is completed, the converted liquidity will be injected into Mercurity’s liquidity pool. The liquidity provider does not need to do anything, but will continue to receive Pair Token and MEE rewards by providing liquidity.
Mercurity.Finance Protocol - TBA Mercurity.Finance Swap Protocol - Beosin Mercurity.Finance Lend Protocol - TBA Mercurity.Finance Insurance Protocol - TBA Mercurity.Finance Synthetics Protocol - TBA
