(Double, Double) 2.0

Double, double 2.0: Improvement and how we can avoid a Smartcoin bankrun

1. Context

If you were here on avax in October, you must have witnessed Smartcoin’s 100x run from 0.02$ to 2$ thanks to this “ponzi” mechanism. The protocol eventually collapsed as people removed their liquidity in huge profits and sold the rewards, creating huge selling pressure with liquidity being squeezed. The bank run was inevitable as Smartcoin was still a Defi 1.0 model with user-owned liquidity.

2. $LEO’s solution.

Our liquidity node is safe from that downfall as all of the added liquidity is locked forever following OHM’s defi 2.0 model, preventing users from removing crucial liquidity during profit taking events. Moreover, as we have a 16% tax on sell, people are more incentivized to hold their rewards. In case of a high sell volume, our IGP pool will capture all that tax and as a result more avax rewards will go to xLEO stakers. As xLEO stakers have earned over 20% of their investment back in avax after just 4 days, these rewards are crucial for the earnings of the whole protocol. That being said, we have measures against a bank run, and sell volume actually benefits the protocol as well. Hence, we are