First launched in September 2020, Smoothy addresses the problem of stablecoin swapping. Its new version upgrade will offer a single pool that can accommodate over twenty different stablecoins.
The protocol uses what it terms as ‘algorithm optimization’ to reduce gas fees to around 10% of what similar pools such as the Curve yPool and mStable offer.
It claims to offer these huge savings on transaction fees without using Layer 2 scaling technology.
Low Slippage Stablecoin Swaps
Avoiding the problem of fragmented liquidity with various different pools, Smoothy provides a single pool that can accommodate multiple stable assets.
“Theoretically, Smoothy can accommodate hundreds of different types of stablecoins in one pool (even algorithm stablecoin).”
The design uses a unique ‘Dynamic Cash Reserve Algorithm.’ This dynamically allocates the majority of funds in the underlying interest-earning platform. The rest is reserved to meet daily swap needs resulting in better rewards for depositors. It also uses bonding curves to provide zero slippage swaps for many stablecoins.
“Smoothy develops a SmoothSwap algorithm that can guarantee 1:1 ratio swap most of the time if the percentage of the token in the pool is lower than soft weights; if not, a swap is still allowed by imposing a penalty fee as slippage.”
The native SMTY token is used for governance purposes and collateral for adding new stablecoins. The Ethereum-based token will also be deployed on other chains in the future. This is according to the announcement which mentioned Fantom, Binance Smart Chain, and Heco.
The project was audited by PeckShield but posts the usual warnings about associated risks.
Smoothy Airdrop and Liquidity Mining
There is a 21-day yield farming incentive launching on March 9. Addresses that interacted with the Smoothy contract in some way will have the chance to get airdropped tokens.
Half the SMTY supply is reserved for community incentives including the liquidity mining program. Rewards will be distributed after a public token sale but no date was given for this.
Liquidity providers will earn 0.04% swap fees, any penalty fees incurred for swaps out of the protocol’s soft range or exchange rates, and interest.