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Dot Pulse #17 — DeFi Growth Continues & Basilisk Deep Dive
Learn about the Basilisk parachain, Polkadot parachain auctions, DeFi action on Moonriver and governance watcher! 📣
Welcome to Dot Pulse, your window into the Polkadot DeFi ecosystem.
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Continuing our journey into Polkadot and Kusama universes, today it’s time to talk about Kusama’s 8th slot action winner: Basilisk.
Basilisk is different from all the others in that it’s almost a HydraDX spin-off. Though it shares most of the resources, Basilisk has a different purpose and a (somewhat) different team. Let’s dive deep into what this DeFi-focused parachain is working on!
Basilisk: The Liquidity Snek
Basilisk is basically a very independent head of the HydraDX, born as a natural consequence of its growth.
Developed on Kusama, Basilisk focuses on bootstrapping young projects with liquidity and a fair token distribution.
If you’ve ever built a project in crypto or anywhere else, you’ll know that the combination of limited resources and experience makes it really difficult to attract public attention at first. In crypto and DeFi, attention is basically the same as liquidity and investment, so a lot of platforms appeared over the years offering various liquidity bootstrap services. But most of them are centralized.
So, how could we create a decentralized liquidity bootstrapping service that is cheap and efficient? This is the question that the Basilisk set out to answer with their unique liquidity pool product wrapped in a Kusama parachain!
Basilisk’s Liquidity Pools
Basilisk offers projects the chance to raise money with the Liquidity Bootstrapping Pool (LBP), which is basically a token sale and an AMM liquidity seeding combined into one.
Liquidity Bootstrap Pools consist of two tokens: the project’s token and a collateral token (e.g. DAI) that are distributed with changing proportions. In the beginning, the project’s token makes up nearly the entire pool. As the LBP event starts, smart contracts decrease the target weight of the project token, which also changes the effective price at which it can be purchased. The idea is that the pool constantly tries to engineer sell pressure and ensure that everyone gets in at a fair price. It’s basically a Dutch Auction system where the price is lowered until it finds the right buyer. This is also why the initial LBP price is usually a humongously large amount that is way higher than what the team actually wants to sell at!
The end result of an LBP is that the contributors got the tokens at the price they wanted, while the project has all the liquidity it needs for launch (or development).
The LBP is the main hook for Basilisk, but it’s not the only type of AMM it enables!
We also have your standard xy=k pools, much like Uniswap V2, with one important innovation: matched orders. Basically, instead of always trading with the pool, the protocol will actually facilitate a direct swap transaction if there’s one party selling and another buying for a similar amount.
The stablers will also be happy to know Basilisk aims to support a “flat curve” AMM like Curve, enabling super efficient stablecoin swaps.
But Basilisk’s modular framework does not stop here: the platform supports vAMM-based pools like the ones seen in Perpetual Protocol or Siren. These are perfect for derivatives trading, which is not something you often see in a decentralized exchange!
Community is life
Basilisk’s roadmap is full and the path is still long, but the Snek team counts one of the most active and engaged communities in DotSama land.
Basilisk will return the favor and reward the most involved community members, who are going to be recruited as stewards, with a distribution of 5% of the BSX token allocation.
So, if you are already tinkering with Basilisk, stay tuned!
Why Basilisk is not HydraDX’s canary
We’ve mentioned that Basilisk is not HydraDX’s clone on Kusama, so how are they different from each other? Well, for the most part it’s all about the Omnipool.
Like Basilisk, HydraDX focuses on revolutionizing the world of exchanges and liquidity pools. But it wants to do so with the biggest liquidity pool the DeFi ecosystem has ever seen! This Omnipool can be considered as an “ocean” of assets, instead of many separate pools.
Basically, HydraDX uses the fact that it can freely mint HDX to make it the base pair for every other asset. So you can provide liquidity with one token and the protocol will match that deposit with some new HDX. But since it’s all one pool, you can essentially trade a single token against the entire HDX supply in the pool. This reduces slippage and makes the exchange more efficient and friendly.
Anyone swapping assets for HDX will be effectively giving their assets to the protocol, so we see the idea of Protocol Controlled Value in full swing here!
Basilisk’s Crowdloan Stats
Basilisk has won the 8th slot action on Kusama raising 222,221.915 KSM over a cap of 222,222 KSM, counting 11,891 unique contributors.
Contributors are rewarded with BSX tokens based on the size of their contribution during the crowdloan. After having won the parachain spot, 15% of BSX total supply is being distributed to contributors. Unfortunately the token is not tradable yet, so we can’t estimate the returns for crowdloan participants. But hopefully that should be solved soon!
As expected last week, Parallel took the fourth Polkadot parachain slot!
On Kusama, Subsocial quickly took the last round. For this one we have another dark horse instantly rising to prominence, Zeitgeist.
Active Crowdloans (Polkadot)
TL;DR: Now in a strong lead at 5.49M DOT bidding for 20% of the supply. The parachain is a DeFi-focused smart contract platform largely backed by Bithumb Global.
TL;DR: Offering 15% of supply to launch the main Polkadot version of Calamari (see above for an explainer). Collected 3.7M DOT.
TL;DR: An NFT parachain created by Enjin, offers 10% of the supply. Took second place with a 4.5M DOT contribution so far.
Active Crowdloans (Kusama)
TL;DR: Offering 12.5% of ZTG supply, Zeitgeist wants to build a generalized prediction market using Substrate.
Earn KAR by staking on Karura DEX
Yields are around 20% APR (or 45% with loyalty bonus) for KAR/KSM.
KSM/LKSM farm has 15% APR (45% with loyalty)
KAR/kUSD offers an APR of 65%, 95% with loyalty.
Earn KAR + BNC (Bifrost tokens) when staking kUSD/BNC
APR is 120% with loyalty, 35% without.
Sushi farms on Moonriver continue to lose profitability, seeing a 10% APR even! But there are still a few decent pools with 80% or so.
Solarbeam farms are still running strong with plenty of >100% APR choices for brave degens.
RomeDAO is still giving a solid 10% return every 5 days for OHM-style staking (yeah that’s a lot!)
Moonriver had a pretty busy week with a major protocol upgrade and a few new projects deploying!
With Runtime Upgrade 1001 the protocol introduced a few changes to how its staking mechanism worked. As you may know, parachains don’t need to have validators but they still require dedicated collators to produce blocks. It’s kind of similar to the role of a sequencer in rollups.
One change is largely cosmetic as the platform changed any use of the word nominator to delegator. This is mostly to avoid confusion with Polkadot nominators and because the collator selection model is much closer to that of Delegated Proof of Stake. Hence, any action where you’d “nominate” collators is now called differently, even if it does the same thing as before. This barely changes anything on the EVM side, as you’re quite unlikely to be using delegator-related functions in your DeFi protocol code.
More significant is the fact that you now have 48 hour delays for delegating and withdrawing your stake, which was bumped from 2 hours. This is important to increase the stability of the network, which is always useful! The more important benefit is that Moonriver might see an increase in gas capacity soon, as the more stable it is the safer it is to increase its limits. But no guarantees there just yet!
Beyond that, we saw two new protocols landing to Moonriver: MAI (MiMatic) and Mochi Market. MAI is a stablecoin protocol like DAI and as such becomes the first native stablecoin on Moonriver. While Mochi is a cross-chain platform for NFTs, which are definitely all the rage these days!
MOVR unique addresses are steadily growing in the meantime, so things are looking quite good!
Bifrost announces its runtime upgrade to v0.9.12, which will include vsBonds, certificates representing the parachain auction period and vsKSM/vsDOT redemption rights.
Phala Network has launched a powerful smart contract, Fat Contract9, which will support computation-intensive tasks, provide low-latency real-time computation and access Internet services, while granting confidentiality and irreversibility to the users.
Composable Finance has introduced “Mural”, a bridge for the NFT ecosystem that will allow NFT movements across various chains like Ethereum, Polygon, Arbitrum and Moonriver.
(Kusama) Referendum 160 to upgrade the Kusama runtime to v9130, passing unanimously.
(Kusama) Referendum 159 to upgrade Statemine runtime to v601
(Kusama) Motion 410 Nova Wallet proposal: dApp browser, Statemine/Statemint integration, NFT support, Staking & UI rework and improvements.
All info in this newsletter is purely educational and should only be used to inform your own research. We're not offering investment advice, endorsement of any project or approach, or promise of any outcome. This is prepared using public information and couldn't possibly account for anyone's specific goals or financial situation. Be careful and keep up the honest work!