Baklava Space - Proposal to build liquidity support services for Avalanche DApps

Hey all,

Team Baklava Space would like to propose a liquidity support service, the objective is to bring liquidity to DApps on Avalanche.

Who are we?
Baklava Space is a synthetic asset creation and minting platform on Avalanche, apart from our existing synthetic platform, we are looking into building liquidity pools, as an extension of what we have been doing. This post is a request for comments / feasibility study.

Why is this important?
DApps needs liquidity and liquidity is costly.

In the case of DEXes, Baklava Space’s will provide a liquidity pool consisting of various stable tokens, acting as the counterparty to the trades on this DEX, when a trader long BTC, the pool shorts BTCs.

This liquidity pool is also applicable for DApps such as swaps, options vault, etc.

How do we achieve this?
Users deposit their tokens (eg: BTC, ETH, AVAX, sAVAX and stable) into our liquidity pool to gain yield. There is capital efficiency as the pool is deployed against traders.

Example. When Alice deposits $1,000 USDC into a pool which has $9,000 worth of tokens, Alice receives our imaginary BLP tokens representing her 10% claim to the pool $10,000 ($1,000 + $9,000). If there’s a trade done on this example DEX, the trader makes a trade and our liquidity takes the opposite position, if the trader gets liquidated the pool takes the $1,000 winnings and adds to the pool, making the pool $11,000 worth. Now Alice’s BLP token is able to claim 10% of the pool, which is $1,100. On the contrary, if the trader wins the pool drops to $9,000 and Alice’s claim is now reduced to $900. BLP is like an index fund, taking the counter position of traders.

Our BLP will have 3 elements for real revenue: capital gain/loss (Alice’s DEX example) + trading fees + esBAVA.

  • Gain/loss is distributed to BLP with the recomposition of assets in BLP (Alice’s example). Statistically, gamblers (traders) lose to the house (BLP). Based on GMX’s experience, gain was net positive by considerable margin in both bull (Apr - eoy 2021) and bear (2022 - now).

  • Trading fee is distributed to holders BLP (70%) and BAVA (30%). Eg: regardless of gain/loss, the maker/taker fees that traders pay to the platform are distributed to BLP and BAVA holders.

  • esBAVA is the Baklava Space platform’s inflationary reward and vested over a few months. BLP (70%) and BAVA (30%).

If you are familiar with GMX exchange, BLP is equivalent to their GLP tokens and BAVA is equivalent to GMX tokens.And if you are familiar with Synthetix.io, BLP’s position is SNX’s global debt pool position.

NFA.

Let us know your opinion. @Jay

3 Likes

I’d imagine DeFi DApps are starved for liquidity, if a global debt pool, like the one by GMX is available for third party to plugin, that will be interesting.

Have you spoken to Dexalot or even GMX on Avalanche? @john

Thank you @Gorillaz.

We have not speak to both Dexalot and GMX. We have connections on Dexalot, but we have not discuss about this. Let us know if you have any connection to GMX and can help us to connect.

It is an interesting proposal.

Waiting for Avalabs team to give some support to this project.

I am looking forward if we can work together with the Dexalot team.

Tried their platform after subnet launch and it is very fast (I think it less than 1 second for every tx confirmation)

I have done some research and found some protocols are also trying to utilize/follow the GLP model.

Have you tried gmdprotocol.com? What is the difference between them and your proposal?