Neo gets a flamingo?

Original title: "Flamingo of Neo"

Original author: Notes of Blue Fox

The potential energy of DeFi has been formed. While THE rise and fall of DeFi is inevitable, as a trend of certainty, it has risen.

DeFi spreads from Ethereum

DeFi was first in the etheric fang blossom, stable currency practices, from MakerDAO Uniswap AMM trading practices, the lending practices of Compound, and then to Synthetix derivatives, YFI aggregator practice, DeFi users is less than 200000 people, from the beginning of the now grown to more than 400000 people, DeFi locked asset amount is less than $1 billion, from the beginning of the year to more than $8 billion, so the speed is fast.

Add in the addition of liquidity mining from Compound and Balancer in June of this year, YFI introduced a non-pre-excavated scrip distribution mechanism, and then to NBSP; SushiSwap  And YAM's bifurcation of Uniswap and AMPL, the fire of DeFi has blazed on ethereum.

Of course, the high cost, slow speed, and low throughput on Ethereum also show deficiencies, and at present Ethereum cannot carry all DeFi. Other public chains are gradually gaining the opportunity to participate in DeFi.

The Flamingo Neo

The extensibility of the Ethereum common chain leaves a lot of room for DeFi of other common chains. We've recently seen Neo's Flamingo.

What is the Flamingo of Neo? It is a full-stack open financial protocol based on Neo public chain. In simple terms, this is the basic protocol for DeFi ecology on Neo. Why base protocol or full stack protocol? Because it integrates asset cross - chain, AMM - mode DEX, synthetic stability currency, AMM - mode perpetuity contract trading, etc.

Flamingo, in this sense, is the infrastructure of the Neo ecosystem on DeFi, and in the future, DeFi of Neo will be built on top of Flamingo.

Behind Neo's Flamingo

Flamingo of Neo is based on the Neo public chain. Neo itself makes some groundwork for the new features of DeFi. These include the beginning of formal Neo support for State Root and asset cross chain. Poly Network is a cross-chain interoperability protocol released by Neo, Ontology, and Switcheo Foundation members. At present, Poly Network has been interconnected with Ethernet, Neo, Ontology and Cosmos-SDK. Poly Network can realize asset cross-chain and interoperability of heterogeneous public chains, and Neo supports interoperability with Bitcoin, Ethereum and Cosmos-SDK.

Neo's exploration on DeFi, and in particular DEX's ecology, began with Switcheo, whose cross-chain TradeHub already supports cross-chain asset trading based on Poly Network, generating volume of a certain scale. These are the basic underpinnings behind Neo Flamingo.

Flamingo puzzles with Neo's DeFi

DeFi is essentially an open financial facility built on a common chain. MakerDAO, Uniswap, Compound, Synthetix leave an active exploration for DeFi development by building a system of mobility, fee incentives, and token incentives that the community can participate in.

From the practices of these pioneers, we can see that DeFi presents some obvious features: no licensing, composability, tamper-proof, programmable, open and transparent. These are all new features that are different from traditional financial models. As DeFi, which is essentially the digital native financial paradigm, it is still tied to assets, markets and stabilizers.

An asset is the size of an asset that flows or is locked on DeFi. A market is a market with sufficient depth and low slippage on DeFi. The stability currency is the value carrier of the stability currency as the medium of exchange. All three are indispensable. They run on new protocols, resulting in an entirely new digital native financial paradigm. This is where DeFi gives us the most imagination.

Specifically for DeFi of Neo, its assets include Neo/GAS, a native scrip asset, and NEP-5, a cross-chain contract asset. Neo currently supports asset interoperability with Ethereum, Bitcoin, cosmos-SDK. In other words, in addition to Neo's native Neo assets, ethereum, Bitcoin, and Cosmos-based assets all have opportunities to flow on Neo's DeFi ecology.

At the market level, Neo currently supports DEX in the order book model, such as Nash. The DeFi ecology of Neo's Flamingo is complete only if exchanges form AMM patterns of sufficient depth and liquidity, which is one of the focal points of Neo's Flamingo.

Finally, there is the stabilisation currency. It is also one of the foundations of Neo's Flamingo DeFi Lego bricks.

Neo's Flamingo tries to perfect its Lego pieces

From this perspective, Neo's Flamingo is the construction of its DeFi infrastructure, which complements its AMM-mode DEX, stabilized currency, synthetic assets, etc., and attempts to eventually form a complete DeFi puzzle. Flamingo is perfecting Neo's DeFi puzzle pieces.

Neo's new explorations in Flamingo

Flamingo is the full-stack DeFi protocol, the DeFi infrastructure of Neo, and an important jigsaw of its DeFi ecology. So, what's new about it compared to the DeFi ecology of other public chains?

Explore cross-chain DeFi

At present, DeFi has no large-scale application in cross-chain, except that wBTC, renBTC, etc., conduct fluid-based mining on Ethereal DeFi such as Curve. Currently, the cross-chain of DeFi is in a very early stage. Flamingo can support cross-chain financial protocols in DeFi ecology by means of cross-chain protocols of Poly Network.

If low wear and atomic cross-chain interoperability can be achieved, it can accelerate the flow of different chain assets, increasing the market size and processing power of DeFi. Assuming that many new users cannot participate in DeFi on Ethereum due to congestion, high fees, etc., then there is an opportunity for other public chains to divert assets to run on DeFi of other chains. The STABILised currency of the ERC20 has also started to be diverted to other chains outside ethereum for transfer.

Open AMM's liquidity pool and synthetic mortgage asset pool

At present, borrowing on DeFi is basically based on excess collateral, which is not conducive to improving capital utilization. At the same time, the current AMM model liquidity pool is also in the state of not fully tapped. If the liquidity pool of AMM is connected with the synthetic mortgage asset pool, the utilization rate of funds will be improved and the liquidity will also be improved. This is a new exploration on DeFi.

Incentive mechanism based on contribution distribution

At present, the design level of incentive system on DeFi is uneven. Some have relatively mature and long-term design of token economy mechanism, but the space for community participation in the later period is reduced due to the early fundraising of institutions. Some economic mechanisms are designed to take only short-term action into account. For example, the 10% bonus on the Sushiswap development team had no unlocking period at all, and the founders sold off, causing panic in the community. This is clearly not a design for a long lasting scrip mechanism. Sushiswap is now devising new incentives.

Neo's Flamingo tries to change this situation by proposing a mechanism based on the contribution distribution of project participants, linking the long-term benefits of sustainable development of the project with the contributions of contributors, and gradually exploring the value of its governance token FLM in the process.

In terms of specific components, DeFi exploration of Neo includes WRAPPER, SWAP, VAULT, PERP and DAO. Among them, WRAPPER is a multi-asset cross-chain gateway, SWAP is a liquid trading market on the chain, VAULT is a protocol to generate stable currency and platform certificate, PERP is a trading platform of perpetual contracts on the chain based on AMM mode, and DAO is entrusted to Flamingo's community governance. From the Neo program, cross-chain asset transfer, pledged asset mining, DEX trading, stability currency generation, and DEX perpetual contract will be gradually introduced.

Components of DeFi for Neo

From the perspective of Neo planning, Flamingo's components are not only independent, but also mutually composable. Functional modules can be highly coupled to facilitate the fluidity between different component products. Similar to THE DeFi of ethereum ecology, MakerDAO is one of the most important underlying components of DAI generation. Flamingo's Vault is also a core component of its underlying assets, providing basic liquidity for DEX and pledged tokens. It can interoperate between liquidity pools of different components, thus breaking the state of separation between different liquidity pools and improving the utilization rate of funds.

In addition to the interoperability of liquidity pools, Flamingo also supports FLM of platform tokens as collateral assets with LP tokens of mainstream assets (liquidity pool equity tokens), as well as LP tokens for trading or providing liquidity in the DEX.

Flamingo is based on community governance

The Flamingo of Neo's governance token is FLM, whose distribution mechanism chooses the mode of distribution by contribution. 100% of tokens are distributed to participants of the project. In other words, no institutional private placement, no founder assignment.

So, specifically, who are the project participants? What percentage of FLM tokens will they receive? In the case of the DeFi protocol, the core of its operation is the provider of the asset. Flamingo's NATIVE token FLM of Neo is therefore primarily assigned to participants providing assets. These include:

Across the chain assets

For example, a pledge of assets from other chains, such as Ethereum, can be incentivzed with FLM tokens. Pledging cross-chain assets provides liquidity for cross-chain transactions, and this incentive is limited to the one-week Mint Rush phase I.

Provide liquidity to obtain LP tokens and pledge them

LP token is the equity token that proves its liquidity, for example, providing liquidity on DEX can obtain the incentive of FLM token.

Generate stabilization coin

Liquidity providers can generate FUSD by pledging primary currency FLM or other mainstream assets.

In addition to rewards for providing assets to participate in Flamingo DeFi ecology, FLM token rewards can also be obtained through active participation in governance.

FLM token distribution and Flamingo's primary components

How is FLM issued?

All FLM tokens were issued through the VAULT module. As we mentioned above, FLM has no team assignments or private placements. From the very beginning, Flamingo conducted a one-week Mint-Rush, during which 50 million FLM tokens would be used to motivate cross-chain asset traders to launch the project.

To be more specific, first, users transfer cross-chain assets through Poly Network to deposit different chain assets (such as ETH and BTC), and then generate Neo standard scrip assets (similar to wBTC and renBTC bitcoin scrip assets circulating on Ethereum) through Wrapper. Then, these neO-compliant scrip assets can be pledged in VAULT, and FLM rewards can be obtained.

The week-long cross-chain asset mining will include bitcoin, Ethereum, ONT, USDT and other assets. These assets provide the underlying liquidity for Flamingo's DeFi ecology in the future. In essence, Neo's Flamingo attracts high-quality assets from other public chains through token incentive mechanism, thus forming its OWN DeFi ecology. It can reduce high costs and congestion on different chains OF DeFi, thus gaining its own place in the development of DeFi.

In addition to pledging mainstream assets and providing liquidity, Flamingo can also be rewarded for participating in its governance. FLM itself carries the value of assets across chains, DEX, synthetic assets, loans, and so on, while also serving the governance of the full stack protocol. Therefore, it is a native value carrier in Neo's Flamingo DeFi ecosystem, capturing its full stack protocol costs, governance, and other value.

This is one of the big differences from the current Ethereum DeFi ecology, where the MakerDAO protocol on Ethereum is governed by MKR holders, Compound by COMP scrip holders, Synthetix by SNX holders, and each token captures the value of its own protocol. Flamingo, on the other hand, is a full-stack financial agreement, which captures the value of governance and fees of stabilizers, loans, DEX, derivatives and other agreements.

In addition, since its allocation is 100% community participation allocation, its iterative development direction can be set later through community governance. For example, its product iteration direction, protocol fee capture, governance proposal mechanism, specific design of token allocation, and so on.

There is a positive correlation, and as FLM captures the value of Flamingo's full stack protocols, community participation will increase. Increased enthusiasm for community participation will in turn help capture its FLM value.

Ultimately, the extent to which Flamingo can grow depends on the depth and scale of community involvement, such as the introduction of new protocols or products and the combination of new things by the community. At the same time, it is also necessary to rely on the community to bring in more high quality assets of other public chains to participate in Flamingo's DeFi construction.

No matter how many ups and downs there may be, the overall potential energy of DeFi will increase as more and more public chains participate in the exploration of DeFi!

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