About Shell Protocol Airdrop
Shell Protocol Airdrop is a decentralized exchange (DEX) that facilitates low slippage stablecoin swaps. Shell Protocol utilizes the structure of an automated market maker (AMM) to enable trustless trading through a liquidity pool.
Shell Protocol doesn’t have an own token yet but could launch one in the future. Making a swap or providing liquidity may make you eligible for airdrop if they launch an own token.
| Platform | Airdrop Ends | Max. Participants | Website |
|---|---|---|---|
| ETH | N/A | Unlimited | Click Here To Visit |
Description of Shell Protocol
There are five dimensions along which Shell liquidity pools can be configured:
- Ideal weights for reserve stablecoins (w)
- Depth of 1:1 exchange (β)
- Price slippage (elasticity) when not 1:1 exchange (∆)
- Maximum and minimum allocation of each reserve (α)
- Fees (, λ)
Reserve Weights
Each stablecoin reserve in the pool has an ideal weight, w. It determines what percentage of each reserve the pool wants to hold. If w = 0.5, then the ideal weight for that reserve will be 50% of the total reserves held by the pool. The first Shell pool deployed will be 30% DAI, 30% USDC, 30% USDT and 10% SUSD. When a pool is “balanced”, actual weights are close to ideal weights, the pool functions as a constant-sum market maker. The sum of all the balances remains unchanged before and after a swap.
Dynamic Parameters
All of these parameters (α, β, ∆, , λ) can be adjusted post deployment in order for the pool to dynamically adapt to new market conditions. The pool can have deep 1:1 liquidity when there is low volatility and then readjust parameters when there is high volatility (see Section 4.2). For the first release, weights will be fixed at deployment but subsequent iterations will enable dynamic weights.
The only constraint on updating parameters is that the value held by the pool (as measured by its utility function, see Section 6.3) cannot decrease as a result of the new parameters. That way, a centralized pool operator cannot remove funds from the pool. The Shell model can work for more than just stablecoins.
As long as all reserves are denominated in the same numeraire (e.g. USD, BTC or ETH), then the model works equally well. Thus a pool could create liquidity between BTC on Ethereum or various staking derivatives.
Earn yield and swap stablecoins
Deposit your stablecoins into liquidity pool and receive shells, a natively liquid, diversified and yield bearing asset.
Deposits and withdrawals
The advantage of defining the pool’s logic in terms of a utility function is that it becomes relatively straightforward to construct our three main behaviors: deposits, withdrawals and swaps. This section will focus on deposits and withdrawals. Recall that for deposits, the depositor adds reserve tokens to the pool and receives shells in return.
The pool logic must therefore determine a conversion rate between the tokens added and the amount of shells created. For withdrawals, the pool must determine a conversion rate between the shells redeemed by the withdrawer and the amount of tokens removed from the pool.
Conclusion
The model presented in this paper is the first of many iterations. It has weights, deep liquidity, protections against a broken peg and dynamic fees. The behavior of the model can be adjusted dynamically by changing parameters. This allows pools to adapt to new use cases and market conditions. Shell will ultimately create a liquidity pool model that can act as an operating system for stablecoin AMMs. Given the superiority of shell tokens versus individual stablecoins, shells will eventually become the primary means of storing and transacting value.
