Spartan Protocol Project Review: Incentivized Liquidity And Synthetic Asset Generation

The Spartan Protocol is a liquidity protocol for asset exchange and synthetic asset generation, on Binance Smart Chain (BSC), utilizing elements from some of the largest De-Fi platforms.

By
Rich
on
December 28, 2020
Category:
Project Insight

Spartan Protocol Project Review

The Spartan Protocol is a liquidity protocol for asset exchange and synthetic asset generation on Binance Smart Chain (BSC). The foundation of Spartan is its liquidity pools, similar to Uniswap, but instead of a fixed-rate fee model, it uses a liquidity-sensitive fee model similar to THORChain's slip-based fees. 

Spartan Protocol also used to elements of other well-established projects such as: Synthetix, MakerDAO, and Vader/Vether Protocol. Spartan Protocol has combined aspects of these projects to create an innovative project that runs on the BSC instead of the Ethereum Network. 

The protocol contains: 

  • SpartanSwap — An Automated Market Maker (AMM) with liquidity sensitive fees.


  • SpartanSynths — a mechanism for minting synthetic assets on Binance Smart Chain, anchored to strict and floating price feeds from other assets, which is needed to create derivatives and leverage.


  • SpartanLending — allows for borrowing or lending assets.


  • SpartanDAO — a mechanism to govern the entire system and distribute protocol incentives


  • SPARTA — a single fixed-supply network asset that coordinates participation and incentivizes capital formation for synthetics and lending


The SPARTAN AMM algorithm (derived from THORChain) 


Spartan Protocol's way of optimizing capital efficiency differs from the way that Synthetix and MakerDAO. Spartan Protocol will use their AMM, which uses slip-based fees, to drive value and cater to liquidity providers (just like ThorChain). It will also use a single settlement asset ($SPARTA) and protocol wide incentives to bootstrap liquidity.

Spartan also attempts to solve the liquid creation of synthetic assets using collateralized pool shares, where positions can be deterministically priced and instantly liquidated. 


The Spartan Protocol caters to  all three using collateralized pool shares, instant liquidations, and pool incentives. Anyone can create a synthetic asset, but it has to have an associated price feed. Price feeds can be both internal to the system as well as external (using other AMM price feed).If you want to mint, you must first be a liquidity provider and own liquidity pool shares. These liquidity pool shares are value stabilized (value of their underlying assets), yield-generating (they earn liquidity fees), and can be instantly liquidated, so they make ideal collateral assets.

The mechanism to mint is to up pool shares, and the "liquidity value" of the pool shares is the amount of synthetic asset that can be created. As an example, if liquidity pool shares worth $10k is locked, then up to $10k in a synthetic asset can be created, such as a synthetic stablecoin.

SPARTA TOKEN

$SPARTA was initially distributed via a fair process called Proof-of-Burn, where participants elect to burn their assets in return for a fair share of the initial 100,000,000 $SPARTA 

$SPARTA is required as the base asset for providing liquidity, as well as the collateral asset for lending and borrowing. The $SPARTA token will have a maximum supply of 300,000,000 tokens; however, the mechanisms in place will make it almost impossible to get anywhere near the maximum supply. 

This is executed via an asymptoting algorithm that actively controls supply, and in addition, a protocol-level fee burn (from swaps and liquidations) combats emissions while simultaneously rewarding liquidity providers and asset-minters. 


The remaining 200,000,000 $SPARTA is issued to holders of SPARTAN Liquidity Pool Shares, based on how much SPARTA is locked. The supply curve starts at 30% annual emission, reducing to 3% after ten years


Key Metrics



Lending Markets

The lending market is a system that allows anyone that has deposited collateral to borrow assets of other users (for a fee). If the value of the collateral of a borrowed asset goes below its rate it will be liquidated to cover the debt. The fee in this system is dynamic, achieving a minimum reserve ratio between two assets. Ulitmately, Users can lend and borrow assets to achieve a leverage long/short position on any asset they want. 


Synthetic Assets 

Like synthetics in traditional markets, synthetic crypto-assets are designed to mimic other assets' value, giving investors the leverage to trade digital and conventional assets while staying in the crypto ecosystem. (ie. BSC or ETH etc.)

They are useful for lending, leverage, and derivative markets.

There are three agents that synthetic assets cater to:


  • Those who wish to short the asset will mint it with their collateral, sell it, and hope to repurchase it for less.


  • Those who wish to long the asset will buy it in speculation of liquidate minters when the price goes up.


  • Those who wish to provide liquidity for an asset and want to make the market. 


SPARTANDAO Governance

The Spartan Protocol has some governance functions build in to a small contract. Users can vote on things such as fee rates, time factors and an ability to upgrade some parts of the code. The contract that allows holders of liquidity token shares (not $SPARTA), to lock up their liquidity token shares and prove their ownership of the system, then can then vote on proposals. 

By not using the $SPARTA token for governance the liquidity is always at risk, thus good governance decisions will be rewarded, as for bad decisions could lose you some value.

Closing Thoughts

Spartan Protocol brings some of the best aspects of other leading protocols such as Synthetics, MakerDAO and THORChain. It also gives users access to these services on the BSC rather than the Ethereum Network or the Binance Chain. Spartan Protocol is the first to do so on the BSC, giving them a first movers advantage and also allowing users to easily access their Dapp due to the BSCs' low tx cost and block time. Overall Spartan protocol has brought further innovation to the BSC allowing users to access prominent smart contract services.

I find Spartan Protocol an interesting project, it provides many nifty possibilities to lend or borrow, create synthetic tokens and allows users to access open and permission less swaps and markets.



Go check out their website and social media:


WEBSITE


MEDIUM


TWITTER


TELEGRAM


Tags:
No items found.
Rich

Richard is a multilingual writer, located in the Netherlands, husband and father, cryptocurrency and tech enthousiast enjoys long walks and bicycle rides. Fervent Binance Smart Chain projects promotor.