Dear Ballers,
Hi! We are excited to present our proposal to deploy a Friendly Fork of the Balancer protocol on Metis Andromeda! The Hummus Exchange team aims to bring its proven stablepools and Balancer’s variable pools together under one AMM; yet another first for Metis. Balancer is proven and trusted, and the Hummus team is confident we can deliver.
Background
The Friendly Fork model was first introduced by @followthechain in this October 2021 post in order to find a mechanism to capture unmet demand for Balancer’s capabilities on other chains without dedicating Balancer team resources beyond the scope on Ethereum (and now, Polygon and Arbitrum).
The Friendly Fork model is also meant to properly align and balance the interests of BAL token holders and those of the forking team. This model has the added benefit of expanding Balancer’s developer mindshare.
Hummus Exchange endeavors to add to Balancer’s incredible success story with our ultra-low-slippage stableswap automated market maker (AMM) and ve-boosted single-side staking mechanism in the growing Metis Andromeda Layer 2 (L2) ecosystem.
With the impending launch of AAVE v3 on Metis Andromeda, we expect Metis usage, building, and integration to increase significantly (1 2 3 4). As the highest-TVL protocol on Metis and its role as a stableswap, Hummus Exchange is perfectly positioned to be the foundational DeFi lego for the entire ecosystem. The Hummus Team is excited to bring Balancer’s composability and weighted pool mechanism to Metis, meanwhile returning value to the incredible Balancer community!
Introducing Hummus Exchange
Hummus Exchange is a proven single-side and decentralized AMM designed for exchanging stablecoins on the Metis Andromeda network. Users can swap stablecoins on Hummus with extremely low slippage and fees. They can also stake stablecoins to generate yield, and stake HUM tokens alongside them to boost that yield.
Hummus is the first and only licensed fork to-date of Platypus Finance’s extremely successful protocol on the Avalanche C-Chain. Per Platypus, Hummus “successfully completed all requirements, and this agreement will enable more DeFi users on the Metis blockchain to benefit from the stableswap innovations we brought to Avalanche.”
Hummus is the first and only dedicated stableswap on Metis. Using Hummus gives users several advantages over traditional swap protocols:
- No impermanent loss risk for liquidity providers;
- Single-sided liquidity provision;
- Ultra-low slippage for traders;
- Minimal fees;
- High capital efficiency; and
- Easy scalability of liquidity pools with new tokens.
The Evolution of Hummus Exchange
Since launching as a 1:1 fork of Platypus Finance, the Hummus team has continued to evolve the protocol to best position in the Metis ecosystem and to reward its users.
Only four months after launching, we began sharing swap fees with liquidity providers. Around the same time, we integrated Chainlink price feeds on Metis Andromeda mainnet. That same month, Hummus was chosen by Metis Foundation to be the second recipient of the Metis Marathon builder incentive rewards program. We also reworked the veHUM UI to improve utility and community. Finally, in November last year we lowered swap fees to promote balance across the stablecoins’ coverage ratios.
Soon, we will introduce voting gauges and a bribing mechanism across our pools in a big step toward decentralized governance. We will also launch HUM time-locking to help new users catch up to early adopters, thereby improving the UX, protocol growth, and governance.
Hummus Has the Support of the MetisDAO foundation
In August 2020, the Metis Foundation committed 54,000 METIS tokens (~$2.1 M USD at the time) to bolster Hummus and its innovative offerings through its builders incentives program, called the Metis Marathon. Metis Foundation chose Hummus to “help [Metis] accelerate the growth of [its] Defi ecosystem. Having a next generation stableswap that can take advantage of the speed and cost effectiveness of the Metis Network will expand the capabilities for what developers can build.”
The Hummus and Metis teams continue to collaborate for the benefit of the Metis ecosystem’s development. This strategic partnership allows Metis users to swap in and out of their favorite stables with extraordinarily low slippage.
The Hummus protocol currently has two pools that group assets according to their risk levels. Newly-added or volatile tokens are firewalled in the Alt Pool from more established stablecoins in the Main Pool so that the Main Pool’s health is maintained and protected in cases where one of the added coins falters or depegs, temporarily or otherwise. Accordingly, the Alt Pool tends to pay higher rewards.
By utilizing Chainlink’s decentralized oracle network, Hummus Exchange has access to high-quality, tamper-proof price feeds needed to help detect if any of the listed stablecoins deviate by more than 2% from their USD peg. This helps protect liquidity providers’ deposited collateral as the protocol will automatically halt stablecoin swaps if it spots a deviation, and will also disable withdrawals of other assets from impacted pools.
The Metis Andromeda Network
The Hummus team chose Metis because of the speed, security, and efficiency of its technology and the expertise and the Metis team’s dedication to decentralization. Combining Platypus’ ultra-low slippage stableswap mechanism and dynamic staking rewards system with Metis has proven a successful strategy–Hummus has remained the top TVL protocol on Metis for months.
Founded in 2019, Metis launched its Layer 2 mainnet on November 19, 2021. Metis is building a hub for the entire Web3 economy in 3 stages: Layer 2 Ethereum scaling solution with fast and cheap transactions; no-code integration via a middleware layer powered by smart contract templates; and a Decentralized Autonomous Company (DAC) infrastructure enabling both blockchain and Web2 companies to build decentralized businesses on-chain, with all the functionalities of real-world enterprises and all the security and decentralization of Ethereum.
Metis Andromeda is a newer but quickly maturing decentralized ecosystem. Metis users enjoy the utility of well-known dApps and integrations–such as Chainlink, Layer Zero, Redacted Cartel, DIA, Sushiswap, Multichain, Beefy, QiDAO, Relay, Synapse, Debank, and Celer–as well as Metis-native protocols such as MaiaDAO, Netswap, Revenant, and many others. One can find the most up-to-date list of leading protocols on the network at Ecosystems Archive - Metis-Smart L2.
Metis has developed an “Optimistic” rollup solution to bundle and sequence transactions on the layer above Ethereum (Layer 2) and then send that data back as one transaction to the Ethereum Layer 1 main chain. In doing so, the Metis Network is able to offer extremely fast transactions that take just a few seconds and cost just a few cents, while still maintaining the security of the Ethereum network. Optimistic rollup approaches result in somewhat long times required to confirm withdrawals back to Ethereum’s L1. Once the Metis network is fully deployed, withdrawal times back to Ethereum will be cut down to just a few hours and, eventually, minutes.
To further advance decentralization, Metis also offers data storage on-chain that is both decentralized and affordable. On top of the decentralized infrastructure, Metis is also well on its way on the roadmap towards full decentralization of governance
Motivation for the Friendly Fork
The Hummus Exchange team aims to bring its proven stablepools and Balancer’s variable pools together under one AMM; yet another first for Metis.
Many DeFi users incorporate single-sided liquidity provision into their investment strategies, and some prefer it over multi-sided liquidity pools. While Hummus offers a best-in-class stableswap protocol with the capability to provide single-sided stablecoin liquidity (and licensed from Platypus Finance), it currently lacks variable pools, thereby missing a large demand segment. In fact, the Metis ecosystem lacks a protocol which allows users to provide liquidity into weighted variable pools, which Balancer would enable.
The Metis ecosystem is growing quickly, with transaction volume growing by 1000% in January 2023 and TVL growing alongside it. The introduction of key network building blocks over the past year (Hummus, Netswap, Hermes, Tethys, Chainlink, Hera, etc) has contributed significantly to Metis’ rapidly increasing adoption. The most recent and largest catalyst has been the successful snapshot vote and technical review of AAVE v3’s deployment on Metis. AAVE’s anticipated arrival on Metis predicates significant growth in adoption and awareness of the entire network ecosystem not only by AAVE’s size and repudiation but the essential capabilities it brings – borrowing and lending.
The Hummus Exchange team submits this proposal to deploy a Friendly Fork of Balancer to capitalize on several rare intersecting opportunities:
- The highest TVL stableswap AMM on an L2 operating under license and continuously incorporating new features;
- A rapidly growing L2 ecosystem anticipating the deployment of the largest borrowing and lending protocol in DeFi;
- A strongly-backed L2 with a passionate team and decentralization at its core; and
- Growing trust in DeFi.
The deployment of Balancer on Metis will benefit Metis users, Ballers, and the entire DeFi landscape.
Technical Specifications
The Hummus team proposes the following for the Balancer Friendly Fork:
- The Hummus team will deploy the Balancer V2 core contracts (vault and main pool factories) without any changes;
- All controllable protocol parameters will be managed by a reputable multisig.
Terms of the Friendly Fork
Hummus Exchange will provide Balancer with 3% of the total supply of HUM tokens. Tokens will be provided to Balancer under the same conditions as those of the Hummus team in terms of vesting and release (see Tokenomics in this proposal).
The tokens will be claimable using an address on Metis Andromeda determined by Balancer.
As part of the agreement, Hummus Exchange requires Balancer to engage in marketing, advertising, promotion, and community building activities for the Hummus protocol and Metis ecosystem, broadly, as described below:
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Creating and publishing original content about Hummus Exchange prior to the Friendly Fork’s launch on Metis and for at least the following six months after it. This will include tweets from the BalancerDAO handle, announcements, releases, medium articles, and any other media, communications, and community building activities as helpful to promote the Hummus fork of Balancer, as appropriate and reasonable. This could include significant news such as, but not limited to, airdrops, launches, new pools, new products, etc;
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Including Hummus Exchange in Balancer’s “Partners & Integrations” list on the main website;
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Organizing and participating in Ask Me Anything (AMA) sessions with the Hummus team and the Balancer community to promote the launch of Balancer on Hummus and later upgrades and news afterward. At a minimum, this will include an AMA shortly before and after the launch on Metis;
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Hummus Exchange is authorized to use the name and logo of Balancer in its official documents in statements with pre-approval on logo usage from BalancerDAO such as “The Official Fork of Balancer on Metis Andromeda” and similar;
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Hummus is authorized to use the name and logo of Balancer in its official documents in statements with pre-approval on logo usage from BalancerDAO;
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Providing statements from official representatives of BalancerDAO in support of Hummus to influencers, media outlets, and similar. This will include both written and audio statements as required by the channel used (articles, video, podcasts etc.). At least one statement should be shared before the launch of the platform; and
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In general, making it clear to the Balancer community that Hummus includes an officially approved Friendly Fork of the Balancer Protocol on Metis Andromeda.
If needed and as appropriate, Hummus Exchange and BalancerDAO can establish a Memorandum of Understanding (MOU) if this proposal is accepted.
Hummus Tokenomics
HUM tokens have a fixed total supply of 300,000,000. Users can find a graphic of our tokenomics on our docs site.
Token allocation is distributed as follow:
Liquidity Incentives: 151,250,000 (50.42%)
Treasury: 60,000,000 (20%)
Private Sale: 18,750,000 (6.25%)
IDO: 2,500,000 (0.83%)
Team: 45,000,000 (15%)
Exchange Liquidity: 10,500,000 (3.50%)
Advisory: 6,000,000 (2%)
Metis Foundation: 6,000,000 (2%)
HUM token vesting periods began contemporaneously with the token generation event (TGE) and proceed as described below:
- Liquidity Incentives: Reserved for liquidity mining (Discretionary unlock depending on appropriate opportunities)
- Treasury: 5% at TGE, 6 Month Cliff, 36 Month Linear vesting
- IDO: 25% at TGE, 6 Month Linear Unlock
- Private Sale: 10% at TGE, 3 Month Cliff, 18 Month Linear vesting
- Team: 12 Month Cliff, 30 Month Linear Unlock
- Exchange Liquidity: 50% at TGE, 6 Month Cliff, 6 Month Linear Unlock
- Advisory: 12 Month Cliff, 30 Month Linear vesting
Hummus set aside 10% of total HUM token supply for the Platypus team, to be delivered in weekly installments over the course of 12 months. The Platypus team plans to airdrop 625,000 HUM tokens monthly on the Metis network to vePTP holders for 24 months (15,000,000 tokens total).
Hummus Token
- Name: Hummus
- Symbol: HUM
- Decimals: 18
- Total Supply: 300,000,000
- Address: 0x4aAC94985cD83be30164DfE7e9AF7C054D7d2121
SWOT Analysis
Strengths
Hummus Exchange and its progenitor, Platypus Finance, are proven industry-leading stableswap protocols. The Hummus team is experienced, diligent, and organized, and the project itself is well-funded. Hummus continues to lead TVL on the rapidly growing Metis ecosystem. MetisDAO is strongly backed, and, crucially, Metis supports Hummus through its Metis Marathon, Builder Incentive program, and background technical and communications support. Additionally, the Hummus/Platypus code has been audited multiple times by Hacken and other auditors.
Weaknesses
Hummus Exchange currently does not benefit from the trading volume on alternative (volatile) pairs. Balancer would strengthen the Hummus protocol and UX in this respect.
Bridges are typically weak points in DeFi environments. As an L2, Metis relies heavily upon users bridging assets to and from its network. The very recent technical review of Metis’ suitability for the AAVE’s deployment on the network included a look at the Metis bridge. This review gave the Metis bridge an “Optimal’’ rating and also noted that additional bridging options exist such as Celer, Multichain, and LayerZero. MetisDAO also recently announced work to improve onramping.
Opportunities
The Hummus Exchange team aims to bring its proven stablepools and Balancer’s variable pools together under one AMM; yet another first for Metis. In fact, the Metis ecosystem lacks a protocol which allows users to provide single-sided liquidity into variable pools, which Balancer would enable.
The Metis ecosystem is growing quickly, with transaction volume growing by 1000% in January 2023 and TVL growing alongside it.
The most recent and largest ecosystem catalyst has been the successful snapshot vote and technical review of AAVE v3’s deployment on Metis. AAVE v3 coming to Metis is a huge opportunity for Balancer, Hummus, and Metis.
The deployment of Balancer on Metis will benefit Metis users, Ballers, and the entire DeFi landscape.
Threats
Competition is always high in DeFi. Metis has several AMMs that offer variable assets (Netswap, Hermes). Hummus remains the leading AMM for stablecoins, however.
Bridges are typically weak points in DeFi environments, as mentioned above.
Conclusion
We believe this is a great opportunity for the Balancer Community. Hummus’ deployment of Balancer on Metis Andromeda ultimately increases the number of Balancer users as well as the number of protocols building upon its technology. This project will also increase the number of developers working on the protocol, give precious feedback to the Balancer core team and ultimately, inspire us all to do better.
We hope this presentation gives you sufficient background for our project and our vision. We thank the entire Baller community in advance for its consideration of this proposal!
Sincerely,
The Great Hummus, on behalf of the Hummus Team
