Detailed Platypus Crypto app Review by DeFi Teller

Name: Platypus
Item: Platypus
Author: Frank Stewskid

Last updated: Aug 16, 2023

What is Platypus?
How does Platypus work?
How to use Platypus?
The PTP token
Is Platypus safe?
Partners
What's next?
Links

What is Platypus?

Platypus Finance is an AMM-based stableswap with a single-sided liquidity provision. The project received a grant from the Avalanche foundation.

The Platypus protocol is implemented on Avalanche as a set of smart contracts. Its single-sided approach aims to solve problems of the existing stablecoin exchanges, such as impermanent loss, capital inefficiency, and user experience fragmentation. The single-sided liquidity pools not only eliminate the risk of impermanent loss for liquidity providers, but also minimize slippage for traders.

How does Platypus work?

Platypus offers two main products, StableSwap and liquidity pool, designed to offer lower slippage, higher scalability, and enhanced capital efficiency.

While older generation stablecoin exchanges face liquidity fragmentation due to the closed liquidity pool model, Platypus offers a shared liquidity design. All the stablecoins (for example, USDT, USDC, DAI) share the same liquidity pool, which increases liquidity depth and lowers the slippage.

Platypus also introduces a “coverage ratio” which is the asset-to-liability ratio of a pool. It determines the slippage, withdrawal, and deposit fee in the protocol. If coverage ratio is < 1 (< 100%), the token is under-covered. And if the coverage ratio is > 1 (> 100%), it is over-covered. Whenever a swap happens on Platypus, the liquidity for the source token increases, and the liquidity for the target token decreases. Consequently, the coverage rate increases for the former, and decreases for the latter.

The protocol incentivizes the actions which pull the coverage rate back or closer to the equilibrium, while penalizing the divergence from equilibrium. For example, when a user swaps an under-covered token for an over-covered token, they bring the coverage ratio of the source token closer to equilibrium. That is why the user receives a positive slippage. And vice versa, if a trader buys an under-covered token, they will suffer a small slippage which goes to the pool.

The coverage ratio is the key input parameter of the Platypus ALM principle (asset liability management). Liquidity providers depositing assets in traditional DEXes sometimes may experience the change in the value of their LP tokens due to the fluctuations of the token ratio in a pool. To mitigate this issue, Platypus records the liability. LP tokens specify the exact amount of tokens deposited to the pool. Consequently, liquidity providers withdraw the same amount and proportion of tokens they deposited (in a normal scenario when there is liquidity).

How to use Platypus?

To connect the Platypus app, one needs to connect a wallet. Platypus wallet support includes MetaMask or Wallet Connect. The main page of the app displays three tabs: Swap, Pool, and vePTP.

To exchange stablecoins, go to the Swap tab, choose the tokens you want to trade in the dropdown menu and enter the amount. If you want to set the slippage tolerance and the transaction deadline, click on the gear icon on the top right. Additional slippage may occur if the token you want to trade is under-covered (see the “How it works” section).

On the Pool tab, you can deposit tokens in one of the pools and receive the Platypus PTP tokens in return. There are two types of APR displayed in each pool: base APR and boosted APR. Navigate to one of the pools and click “Deposit” to deposit your tokens. After you authenticate the transaction, the respective LP token will appear in your wallet. In order to be able to view your LP token, you also need to import the asset to the wallet first (the contract address can be found on the Avalanche Snowtrace; search for LP-USDC, LP-USDT, etc.). After that, click on the “Stake” button in the pool to open the expandable menu. Click “Stake” on the left in the new menu and then “Stake all” on the right to deposit your LP tokens. Over time, you will be able to see the amount of PTP you earned, at the base APR rate. To claim PTP or unstake and withdraw, navigate to the pool and click “Claim” or “Unstake” and then “Withdraw”.

To earn boosted APR, go to the vePTP tab and stake PTP tokens. You will need to claim your vePTP tokens to boost your yield in the pool. PTP tokens can be unstaked at any time. However, vePTP balance will drop to zero as soon as you withdraw PTP tokens.

It is worth mentioning that there are several pools with bridged Avalanche tokens, like DAI.e, USDC.e, and USDT.e. The Avalanche Bridge (AB) can be used to bridge tokens from Ethereum to Avalanche's C-Chain and vice versa to reduce transaction costs.

Platypus fees include 0.01% transaction fee for swaps and deposit/withdrawal fees which depend on the pool's coverage ratio. Fees are used to keep the system in good health as well as to redistribute pool profits to liquidity providers.

The PTP token

PTP is the native token of Platypus. Its total supply is capped at 300 million tokens. The distribution of the tokens is as follows: 2% to the advisors, 2% to the Avalanche Foundation, 17.5% for the public sale, 15% to the team, 20% to the treasury, 3.5% for the exchange liquidity, and 40% for the liquidity incentives.

PTP tokens can be staked to receive vePTP which can boost liquidity mining APR. 1 staked PTP generates 0.014 vePTP every hour. vePTP balance is reset to zero when PTPs are unstaked.

Later on, PTP holders will be able to vote on fees, asset listings, inflation, and risk parameters.