WTF is Mercurial Finance (MER)?
We’ve all gotten used to the slippage that takes place when swapping tokens on the various DEXes. Mercurial creates infrastructure for stable assets on solana stableswaps, and so much more. Mercurial solves that and more, but first, let’s zoom out.
Mercurial (token symbol: MER) is a DeFi's first, a platform of pools and vaults for stable swaps, powered by the Solana Blockchain. MER solves the problem of trading stable pairs on traditional automated market markers (AMMs). AMMs are the protocols in the DeFi ecosystem that allow digital assets to be traded in a permissionless and automatic way by using liquidity pools rather than a traditional market of buyers and sellers. AMMs are how UNI, 1inch, SushiSwap and the rest of the emerging DEXs are able to do what they do.
The problem is that, up to this point, AMMs have high slippage (slippage is the difference between what one expects to pay and actually pays when making a swap). Capital is largely underutilized, since most of the assets are not needed for swaps most the time, as the userbase of these DEXs don't demand constant use of the pooled funds. In addition to high slippage, swapping fees are static, resulting in wasted fee opportunities for liquidity providers when the market demand is high.
So, how does Mercurial solve these problems? Well, the name should be a damn good clue - Mercurial is variable, changeable, and thus able to better flex with the volatile assets and market it operates on top of.
By creating low slippage swaps, MER introduces dynamic fee and capital allocation. Why is this important? Because it is a huge improvement when it comes to profit potential for those of us participating in liquidity pools. Furthermore, it also deepens the pool size. Let’s explore this a bit more...
Through MER’s dynamic fee structure, network fees are increased in periods of high volatility to increase liquidity pools profit and lowered during periods of low volatility to increase trading incentives. It’s a gamified way to manage and mitigate pool profits in highly volatile markets...like the one we’re in right now!
Dynamic fees are one layer of MER’s innovative network design, the next is their Dynamic Capital Allocation. The Dynamic Capital Allocation enables participants in the MER Network to deploy assets in the pools to yield generating opportunities across the entire Solana ecosystem.
Go try @gopartyparrot, the first synthetic protocol on @solana mainnet and mint some PAI.— Mercurial Finance (@MercurialFi) May 31, 2021
Currently they support USDC/T as collateral, but will be focused on unlocking the value of LP tokens as well. 🤑
We look forward to collaborating w Parrot to make stables great on Solana! https://t.co/kN2Cc3UWi0 pic.twitter.com/ekVwCvHepT
THE BIG PICTURE:
Mercurial aims to be the “one stop shop” for stable liquidity. If they should achieve this, they will be able to improve the diversity and liquidity for stable coins traded, transferred and swapped on Solana. This might seem trivial, but it is a major part of DeFi use cases.
MER is built on top of the Solana Blockchain because Ethereum is currently prohibitively expensive for vaults and pools. The wizardry that MER enables would be completely impractical on ETH’s current infrastructure. Solana boasts a 65,000 TPS and sub-second finality, which create an ecosystem where Mercurial’s vaults can execute complex order of transactions instantaneously at very little cost to the protocol. At the moment, it seems like everything that is being built on the Solana Blockchain has a ton of interest due to its natural advantages for DeFi applications.
WHO IS MERCURIAL FINANCE?
Mercurial is led by a team of experienced operators in the technology and blockchain space. From everything we know, they seem like a flat organization (always good when an organization’s espoused values and values in practice are aligned!), led by an international team with diverse talents. The MER team has deep technical chops, strong reputations, and loads of experience developing DeFi tools and systems.
Soing is the Lead. Soing was the founding engineer at Envoy (an a16z funded project, currently valued at $500M USD) and resident engineer at Expa. He is a graduate of Y-Combinator and holds a computer science degree from University of Illinois at Urbana-Champaign.
His co-lead is Ming. Ming is a strategic adviser to Instadapp, Blockfolio, Kyber Network. Ming was also a founding member of the WBTC and Handshake team.
Loi is a co-Founding Advisor. Loi might be familiar to you because he founded Kyber Network, was features as one of “Forbes 30 under 30”, and holds the impressive title of “Top 10 innovators under 35” for Asia Pacific by MIT Technology Review.
The head researcher for MER is Andrew. Like other members of the MER team, Andrew was instrumental in the development and launch of the Kyber Network. Additionally, he authored the DMM protocol. Andrew brings deep expertise in AMM and DeFi systems.
WHO’S BACKING MER?
MER is backed by institutional funders, such as Alameda Research, Solana Ecosystem Fund, OKEx, Huobi, with participation from founders of Coingecko, Nansen and Blockfolio. In late-May, MEr will have an IEO for the retail market.
HOW TO PARTICIPATE
FTX is hosting the MER IEO on May 21st. FTX is a growing player in the DeFi space, so it comes as no surprise that by tapping into the strong reputation and network of FTX, the MER token, built on Solana could be a big opportunity.
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