Armadillo Offers Impermanent Loss (IL) Protection on QuickSwap’s V2

This post was originally published on this site

TL; DR:

  • Liquidity providers risk IL when they provide liquidity for a DEX
  • Meanwhile, DEX users rely on LPs to trade their favorite assets
  • CVI offers Armadillo insurance to protect LPs from IL
  • QuickSwap is making this product available to LPs who want to try it out
  • Armadillo will provide up to $1k in free protection and a 10% discount after that, along with a free NFT for QuickSwap’s users who opt in
  • This promotional offer is available for 1 month, from today, September 21, 2022 — October 21, 2022
  • This insurance is available only for select pairs on V2
  • The Armadillo team is developing models for V3 and plans to add them in the near future
  • Read more about it below, then join the Twitter Spaces today (9/21) at 15:00 UTC (8 am PDT) to ask the team anything you what to know
  • Please note: QuickSwap does not manage or endorse this product. We always encourage users to do their own research and take responsibility for their financial decisions

What’s This?

Included pairs

  • wBTC-ETH
  • wBTC-USDC
  • wBTC-USDT
  • wBTC-DAI
  • ETH-MATIC
  • MATIC-USDC
  • MATIC-DAI
  • MATIC-USDT
  • LINK-ETH
  • LINK-USDC
  • LINK-USDT
  • LINK-DAI
  • BNB-DAI
  • BNB-USDT

FREE? How do I sign up?

  1. Provide liquidity
  2. Click this link
  3. Connect your wallet
  4. Armadillo’s system will recognize if you’ve LPd, or if you hold LP tokens
  5. That’s it!

10% Discount for larger positions

How much does the insurance cost?

  • The pair
  • The time period of the protection
  • The CVI index
  • The liquidity pool ratio
  • The coverage costs roughly between 0.3%-2.5% of the protected amount

What % Does Armadillo Insurance Cover?

Why Only V2?

About CVI

About Armadillo

  • Multi-chain protection — Protects select pairs staked across any chain, DEX, or platform.
  • Non-custodial — The liquidity does not have to be moved to purchase the protection.
  • Customized — Each user sets the pair, amount, and timeframe to protect.
  • Decentralized On-Chain protection — On-chain oracles and smart contracts are used to ensure security and manipulation resistance.

Armadillo Launch Period — Data Analysis

  • On 6/3/22 the beta was launched to the GOVI community with no PR or marketing outside of the community’s channels
  • On 7/17/22 the product was launched to the public

Graph 1 — ETH/USDC price during launch (Range $991-$2021)

Graph 2 — Premium for ETH-USDC/Working Capital in the IL Vault

Armadillo Admin Panel, Showing Full Summary on 8/31/22

Graph 4 — Liquidity Usage (Future Projected)

  • This graph shows the past and future projection of liquidity utilization
  • Working Capital is the most important factor
  • Working Capital is the amount of liquidity used to cover the protection taken
  • This metric is used to determine the size of the hedge required to protect liquidity providers from all possible market dynamics while accounting for their risk tolerance

Graph 5 — Premium Costs vs. Payout (%) Historical Data

Graph 6 — LPs Profit & Loss % by Premium Received

  • The vault’s payouts vs profits during stagnation periods.
  • Initial payouts for protections taken during the early days of the beta launch, when the market significantly decreased
  • Payouts about to be sent to buyers who took IL protections before the upwards market correction
  • LPs’ big winnings during the stagnation period

Graph 7 — Premium % by CVI Values

  • The quadratic parabola fits the historical IL data with the CVI levels
  • The data meets expectations. When the CVI is very high, there would be high IL due to significant downwards movement, when it’s very low it signifies stable growth, which also creates high IL.

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