Ferro Roadmap
Why Ferro?
The Cronos ecosystem is growing but until now it still lacks a dominant Stableswap AMM with deep liquidity. Ferro is here to address that.
Fun fact: Do you know what is the most stable element?
You might think it’s noble gasses but the Noble gasses’ binding energy per nucleon value is less than IRON, specifically Iron-56. This makes IRON the most stable element.
Ferro means IRON in Italian, which perfectly encapsulates our spirit to provide you with the best STABLEswap experience with lowest slippage.
What Is Ferro?
Ferro is an automated market maker (AMM) designed to enable a more efficient way for users to exchange between stablecoins and pegged value assets (tokens that are highly correlated with each other) in the Cronos ecosystem.
Some of the advantages of Ferro over other AMMs are
- Lower fees: Due to gas usage & traffic efficiency of the token swap / exchange mechanism versus normal DEX
- Lower slippages: Highly correlated assets reduce price divergence within tokens of the same pool
- Limited to no impermanent loss: Highly correlated assets reduces overall market exposures of the pools
- More utilisation of pools: Highly correlated assets allow for more utilisation, providing opportunities to benefit by deploying pools into other DeFi protocols.
How Ferro Works?
1. Swaps
Most traditional AMMs utilize a x*y = k invariant (constant-product), where exchange rates are meant to fluctuate according to supply and demand. Such a mechanism ensures that the Liquidity Pool does not drain out even when there are large order amounts. However, this inevitably results in higher slippage when the pool becomes more unbalanced (eg. allocation between 2 assets is 70/30 instead of 50/50 ).
While the mechanism works well for most tokens pairs, it does not provide the best trading experience for pegged-value assets or highly correlated assets. For these assets, users would expect minimal slippage and price fluctuations.
To solve this issue, Ferro takes a hybrid approach with a Stableswap curve which combines both Constant Product and Constant Sum models.
Constant Sum: When the liquidity pool is balanced, the algorithm functions as x+y = k. The blue curve stays close to the dotted line, which ensures a 1:1 exchange of value between tokens.
Constant Product: When the the liquidity pool portfolio becomes imbalanced, the algorithm functions as x*y = k. The blue curve begins to resemble the red line, which guarantees liquidity in the pool.
This smooths out the curve for stablecoins and pegged value assets allowing the users to get the lowest slippage and maximize capital efficiency.
Not only will Ferro provide users immense utility by lowering the costs to exchange Stablecoins, it will also improve composability between different DeFi protocols on Cronos. For example, money market protocols could list their interest-bearing token on Ferro, while any lower liquidity stablecoins bridged from other chains can leverage the Meta Pool (more on Meta pool below) setup to bootstrap the liquidity.
2. Liquidity Pools
Ferro Protocol takes inspiration from some of the most mature Stableswap AMM for its Liquidity Pool design.
There are two types of pools on Ferro: Base Pool and Meta Pool. Each pool will have different characteristics and utilities.
Base Pool
Base Pools are the most basic type of token pool, typically consisting of two or more highly-correlated tokens with the following variations:
1. Standalone Stablecoin pool (usually treated as the “main pool”)
Example: (DAI, USDT, USDC) pool
2. Lending pool
Example: Tectonic tTOKEN (tCRO, tUSDC), Curve’s Y Pool (yDAI, yUSDC, yUSDT)
3. Pegged / Yield Bearing token
Example: (TONIC, stTONIC), (VVS, xVVS)
Meta Pool
Meta Pool provides a combination of Base Pool plus 1 or more token. For example: pairing of Ferro base pool of (USDC, USDT, DAI) with TUSD. The pool will consist of TUSD(on a standalone basis) and Ferro Base 3Pool LP tokens. This means that liquidity providers of Ferro Base 3pool who do not provide liquidity in the TUSD Metapool are shielded from systemic risks in the Metapool.
This will also bring several advantages, such as:
- Prevents the dilution of existing pools
- Allows Ferro to list less liquid assets
- More volume and more trading fees for the protocol
3. Deposit and withdrawal incentives
Similar to the Swap feature, the typical liquidity pools in Ferro will also carry a mechanism to incentivise/disincentivize users to LP a particular token, in order to balance the proportion of tokens in the pool (a.k.a. Deposit Bonus / Withdrawal Penalty).
- Users depositing underweighted token (vs other token in the pool) will receive Deposit Bonus
- Users withdrawing underweighted token (vs other token in the pool) will be charged Withdrawal Penalty
In summary, the introduction of Ferro will bring myriad of benefits to the Cronos ecosystem:
- A more efficient way to access stablecoins & other highly correlated assets with lower fees & slippage
- Composable pools that provide additional utilities to different types of tokens (wrapped token, lending token, yield bearing token)
- Means to bootstrap liquidity for newly bridged assets (e.g. new stablecoins)
We also have an in-depth explanation of our key features in our gitbook.
Ferro Token ($FER)
Ferro Protocol’s native token is $FER, which functions as a utility and governance token. The main purposes of the $FER token are to incentivise liquidity providers on the platform as well as platform revenue-sharing. For more details on the token’s economics, supply and release schedule, please stay tuned as we will release additional information closer to launch.
$FER
$FER token is the main reward/incentive token in the protocol. Users will receive $FER by staking their LP token (obtained after depositing/LP-ing into the pool) into a liquidity farm. $FER token can be further converted into a $xFER token based on the exchange rate at the time.
$xFER
$xFER token is the yield-bearing token of the Ferro Protocol. Users can opt to convert $FER to $xFER at the prevailing exchange rate at any time. Ferro Protocol directs a certain portion of the protocol revenues (e.g. swap fees) into the $FER:$xFER conversion contract, resulting in the continuous increase in value of $xFER over $FER over time.
Ferro Roadmap
Ferro roadmap is broken down into different phases.
Beta Launch
Early May 2022 — We will roll out our Beta Launch with a test pool in Phase 0. This pool will consist of the predominant stablecoins in the market. . There will be no $FER emissions for this phase. However early users who contribute liquidity into the pool can expect a pleasant surprise!
Official Launch
Mid-Late May 2022 — Our token generation event will take place and emission will start. Users will also be able to earn $FER by providing LP and stake $FER for $xFER to earn a portion of protocol revenue.
Q3 2022 and beyond:
Phase 2: Enrich Protocol within Cronos Ecosystem & Boosting Pool
To strengthen the utility of the token, we will launch boosted farms so users can earn more yields. We will also extend the assortment of Base & Meta Pools in cross-chain stables or other Lending / Yield tokens.
The star feature, maturity vaults, will also be introduced in this phase. Holders of $xFER token can opt to lock their $xFER token with different duration options (e.g. 1 month, 6 months, 24 months, or 48 months). By locking $xFER in longer-duration vaults, users can boost their yields in the farm.
Phase 3: Governance
Our goal is to establish a protocol with trustless governance. This is not an easy task by any measure, and is not something that will be rushed. But do expect that the control of the protocol will slowly shift from the core team to a DAO structure over time.
What’s next
We are currently in talks with the leading Cronos launchpad to prepare for our token generation event.
Being native DeFi users ourselves, we are thrilled to present Ferro — Your trusted stable swap venue on Cronos.
Come join our community to get the latest update
