AMP to utilize FRAX-as-a-Service from Ondo Finance
Amp has joined FRAX-as-a-Service to establish a brand new ~$20m FRAX-AMP liquidity pool on Uniswap by utilizing Ondo Finance vaults. This will be the deepest $AMP liquidity pool on any DEX. Amp will provide $10m worth of $AMP to the Ondo vault, with Frax providing the stablecoin side of the pair.
What is AMP?
$AMP is a universal collateral token designed to facilitate fast and efficient transfers for any real-world application.
When using $AMP as collateral, transfers of value are guaranteed and can settle instantly. While the underlying asset reaches final settlement (a process that can take anywhere from seconds to days), $AMP is held in escrow by a collateral manager. Once the transaction successfully settles, the $AMP collateral is released and made available to collateralize another transfer. Amp exists to serve as universal collateral for anyone and any project.
What is FRAX-as-a-Service?
Frax-as-a-Service (FaaS) is an offering from Frax and Ondo to make it possible for projects to increase liquidity in their native tokens on decentralized exchanges by providing liquidity themselves.
With FaaS, a project deposits its token into an Ondo liquidity vault with a flexible duration. Ondo and Frax match those deposits with an equivalent amount of $FRAX to form a liquidity pair. In exchange for providing $FRAX, the Frax DAO receives a fixed 5% APR return on its provided liquidity.
Ondo provides several advantages over existing liquidity solutions. With Ondo, token issuers earn trading fees and rewards which reduce (or even negate) impermanent loss (IL) risk and the cost of capital. With small adjustments, Ondo vaults are well-suited to facilitating direct listings, establishing the first liquidity for a token. Direct listings could eventually replace or complement IDOs.
How will it work?
Frax Finance will provide $10m of $FRAX and invest that into an Ondo Fixed tranche pool. Amp will invest $10m of $AMP into the Variable tranche pool. The Ondo Vault will then pair the assets together to create a FRAX-AMP liquidity pool (total LP $20m) on Uniswap V2. After a fixed duration, Ondo will withdraw this liquidity and pay back Frax Finance its $FRAX (covering any IL risk for Frax Finance from the $AMP supplied tokens) plus a fixed yield of 5% APR. Amp will then receive the remaining assets paid out in $AMP.
Vault Durations and Fees
Number of vaults: 2 vaults of $10m total liquidity, $5m AMP and $5m FRAX in each
Duration: March 16 to June 14
The purpose of launching with vaults of different durations is to stagger the redemption of these vaults. At redemption, the liquidity from one vault is removed, then the Ondo smart contracts will either buy $AMP with $FRAX, or sell $AMP for $FRAX to obtain precisely the amount of $FRAX owed to the fixed tranche investors.
Background on Frax
Frax is the first fractional-algorithmic stablecoin protocol. Frax is open-source, permissionless, and entirely on-chain — currently implemented on Ethereum and other chains. The end goal of the Frax protocol is to provide a highly scalable, decentralized, algorithmic money in place of fixed-supply digital assets like BTC.
By partnering with Ondo finance, Amp and Frax will expand both their visibility and the accessibility for both $AMP and $FRAX tokens by utilizing a capital-efficient mechanism. Amp will pay a fixed fee to Frax Finance of 5% APR, pay any potential IL that they may suffer during rebalancing, and collect any excess fees (including staking rewards where applicable).
Ondo Finance is building a decentralized investment bank. We are developing software that finds attractive investments across the traditional and DeFi landscape, repackages these assets into easily understood risk/reward offerings, and then matches and offers these assets to both institutional and retail investors. Join our community to stay up-to-date with our latest developments and product launches!
This announcement has been written and published by Ondo Finance Inc. and provides no guarantee, commitment, or undertaking to utilize any of its assets, funds, properties or personnel, Ondo Protocol users or other protocol participants. Ondo Finance does not owe, and does not intend to assume, any duties or obligations to Ondo Protocol users or participants, other than duties or obligations arising under laws of general application, such as non-waivable torts.
To the maximum extent permitted by applicable law, all software relating to Ondo Protocol is being provided on an as-is, where-is basis, with no representations or warranties being made to Ondo Protocol participants and with no liability to Ondo Finance or any other person involved in the development of Ondo Protocol. The statements set forth in this announcement also are not intended to be representations, warranties, guarantees or assumptions of duty or liability of any kind, and Ondo Finance hereby disclaims the foregoing and will not be liable for any damages arising from use of Ondo Protocol. In the event of any conflict or inconsistency between this announcement or any other communication and the terms of any software license involved in Ondo Protocol, the terms of the software license shall govern to the exclusion of this announcement and such other communications.
The forward-looking statements in this announcement are subject to numerous assumptions, risks and uncertainties which are subject to change over time. Such assumptions, risks and uncertainties could cause actual results or developments to differ materially from the results and developments anticipated by us. Even if our anticipated results and developments are realized, such results and developments may nevertheless fail to achieve any or all of the expected benefits anticipated by this announcement. We reserve the right to change the plans, expectations and intentions stated and implied herein at any time and for any reason or no reason, in our sole and absolute discretion, and we undertake no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
This announcement is not intended to provide legal, financial or investment or other advice and we recommend that you do not rely on, and do not make any financial or other decision based on this announcement.