Welcome To Bug Finance
Last updated
Last updated
Before we look at what sets Bug Finance apart from its competitors, it’s important to understand where we come from. Bug Finance was adapted from Thena’s codebase which was adapted from Solidly. So let’s first take a look at the Solidly concept:
Solidly is an innovative automated market maker (AMM) and liquidity layer, which delivers cost-effective, nearly zero-slippage transactions for both correlated and uncorrelated tokens. Unlike many other AMMs, Solidly's mechanism design emphasizes generating fees rather than merely encouraging liquidity provision. This approach helps Solidly tackle prevalent AMM issues such as fee distribution, liquidity mining, and bootstrapping. Solidly refined existing AMM models by integrating enhanced incentives, bribe mechanics, and vote-escrowed tokens, while maintaining sought-after features like flash loan-resistant time-weighted average price (TWAP). Solidly also boasts its maintenance-free TWAP and flash loan-proof price estimation.
We are proud to build upon the foundation laid by Solidly and Thena, incorporating Thena's innovative features such as the NFT structure, an improved marketplace for emissions, and a refined emission schedule. Bug Finance, however, distinguishes itself by addressing some of the inherent limitations of Solidly while introducing unique innovations.
Solidly's core innovation involves correlating protocol emissions with fees generated, as opposed to merely incentivizing liquidity. At Bug Finance protocols and significant stakeholders can control $BUG emissions by acquiring veBUG and voting on the liquidity pools they prefer while collecting fees and bribes through their votes.
So, what sets us apart? In most Solidly forks, users must lock the governance token into a voting escrowed token for a specified duration, typically ranging from one to four years. While the variable duration vote-escrow model was intended to align rewards (voting power) with long-term commitment (longer lock duration), it falls short of this goal as the veNFTs are tradeable on secondary markets. Our observation is that trades on the secondary market take away buy pressure from the native token and also remove the alignment of a locking time frame. To address this, we've engineered an innovative solution.
At Bug Finance, users and protocols acquire veBUG by staking liquidity rather than simply locking $BUG tokens. As a result, veBUG can only be obtained by staking LP tokens paired with $BUG and whitelisted by the team, such as BUG/MATIC, BUG/USDC, and partner pools. This system ensures locked liquidity, fostering deep liquidity across the entire platform for the $BUG token and any partner protocols granted a $BUG pair. Additionally, any LP staked into veBUG will still generate emissions, adding a unique twist to the ve(3,3) model by providing dual incentives. Users will not only receive bribes & fees from voting with their veBUG but also earn emissions from the pool they've staked into veBUG.
This can be seen as a bigger ''risk'' than simply locking the governance token. Because of this, we're also the first project to incorporate an exit possibility out of veBUG with an exit penalty that benefits everyone. Besides making it possible to exit any veBUG position we also offer anybody the possibility to still acquire veBUG via Single Sided Staking. More about this is in the veBUG section.
By rewriting the rules for acquiring veBUG, we offer a more professional and streamlined approach that is both innovative and user-friendly, setting us apart as a leading decentralized exchange on the Polygon network.
This isn’t the only thing we improved. Here’s a summary of everything we improved on top of Solidly:
veBUG: Unlike traditional models that require users to lock up governance tokens, we allow users to acquire veBUG by staking liquidity with LP tokens paired with $BUG, or staking $BUG. This approach ensures deep liquidity across the platform and provides dual incentives for users.
Zero rebase: We address the concern of imbalanced voting power in current ve(3,3) models by implementing a zero-rebase model. This approach ensures a more even distribution of voting power, preventing early adopters from gaining an unfair advantage. The zero-rebase model contributes to the long-term health and sustainability of Bug Finance, offering optimal economic incentives for all participants and making it more attractive to new protocols joining the ecosystem.
The Swarm NFT collection: Bug Finance introduces an exclusive NFT collection called "The Swarm," which combines an engaging storyline, different tiers & factions with utility on our platform. These NFTs offer additional benefits, such as airdrops, a share of trading fees, royalties, and access to exclusive strategies and the gated Swarm community.
Fee discounts: By acquiring either a leader or a soldier Bug NFT, users can receive significant fee discounts of up to 50% on the platform, further incentivizing long-term participation and commitment.
Scalability and performance: Bug Finance is built on the Polygon network, which offers faster transactions and lower fees compared to other networks. This ensures a seamless user experience and accommodates the platform's growth. We’re also really excited about zkEVM, which we’re looking forward to possibly launching on as well.
LP Boosted Staking: Bug Finance introduces LP Boosted Staking, allowing users to receive a 2x boost of emissions on their vAMM & sAMM LPs. Rather than locking up for a certain amount of time, there is an exit penalty that decreases to 0%. The exit penalty is based on the APR of the pool, and the curve is set up so that you reach break-even within 4 weeks assuming the APR on entry stays the same. The exit penalties will create a self-sustaining flywheel in and by itself, more in Staking & Exit Mechanism
