Smilee Finance

Welcome to the Volatility Kitchen

I always thought providing liquidity meant guaranteed gains, just sit and be cashing out right?

That couldn’t be further from the truth, data shows that, usually, liquidity providers on Dexes aren’t well compensated for the risks they take.

That risk is Impermanent Loss.

What is impermanent loss?

This is the loss acquired by liquidity providers when the market price of the provided token pair goes down. This means they may exit the liquidity pool with even less than they entered with….and this is after “compensation”.

Any solutions?

Everyone in the Defi space knows that one man’s frustration is another man’s project idea.

I had found this project while researching volatility products (and wondering if such a thing existed).

Here’s how to win WITH impermanent loss.

Smilee Finance has created the first primitive that allows you to create and trade decentralized volatility products and make the most of impermanent loss, literally.

Smilee(v1.69) is a synthetic concentrated liquidity automated market maker (CLAMM), that allows users to buy and sell options whenever, as well as introducing directional Impermanent Gain (long, short, delta-neutral).

I know that’s a mouthful, so let’s break it down.

Impermanent Gain is the profit liquidity providers get as a result of upward price movement of a token pair.

How does Smilee solve the problem of impermanent loss for liquidity providers?

By turning liquidity providers into options sellers.

AND
Traders buy said options and pay a premium.

How does this work?

The Smile Synthetic AMM

With Smilee’s Liquidity to Volatility engine.

• Liquidity providers deposit funds in USDC, within an auction period to an Earn vault ( wEth/USDC, Arb/USDC, Gmx/USDC, wBTC/USDC)
• These funds are disbursed as impermanent gain to Smilee's AMM.
• Here, traders can bet on the movement of a token pair with the premium they paid to get access to the pool.

Traders have 3 categories of options:

IG Bull - Betting on the upward movement of a token pair
IG Bear - Betting on the downward movement of a token pair
IG Smile - Betting on both downward and upward movement so you can eat your cake and have it too.

• The liquidity provided allows for the minting and trading of impermanent gain by the traders. The liquidity provider, in return, earns fees.

See the difference

Still don’t get how liquidity providers earn here?

The LPer earns fees from the premiums paid by traders that bet on the movement of token pairs in a pool when they deposit into an impermanent gain vault.

The cumulative premium paid by the traders forms the base APY of the Earn Vault. This is much more than what liquidity providers usually get across most dexes.

But can traders and LPs cash out whenever they want?

Trade settlements occur at the end of a maturity period in a reflexive pattern, with each Earn vault and Trade pair having a maturity frequency: daily, weekly, and monthly, aimed at achieving standardized coherence.

So, it all depends on how much you're willing to wait.

Let me tell you what else makes Smilee special.

• Smilee is MEV-proof.

Liquidity ranges are equalized and there’s a fixed time duration for all concentrated liquidity. This means no toxic order flow and Just-In-Time liquidity bots. There’s also no need to manually set up ranges.

• Traders can leverage up to 1000x on any of the three types of volatility options with no risk of liquidation.
• The User experience. Smilee maintains a Tinder-like UI that is so easy to understand, especially on mobile. You can simply swipe your way to payouts, you don’t have to get options to get options.

Swipe your way to happiness

• Smiloors discord is the most loving, slightly frat boy-esque discord I’ve ever been in. Filled with trade strategy discussions and pictures of food.

Yes, I recommend it.

Smilee Finance recently launched on Arbitrum mainnet and is now on its way to Berachain.

If you’d like to learn more about Smilee, use our products or you would like to hear an Italian being harassed into saying ‘deposit’ on discord live…

Check out the link tree.

https://linktr.ee/smileefinance

I'm Fawaza.

I'm a writer that fell into Defi.

If you’d like more posts like this on Projects that actually solve problems, follow me on Twitter @DearFawaza

TL; DR

Smilee Finance is an Arbitrum project that turns impermanent loss into a source of liquidity for onchain derivatives.
They create Decentralized Volatility Products like:

• Earn (Real yield) for Liquidity providers.
• Trade (Impermanent gains) for Traders

Learn more about them at https://linktr.ee/smileefinance