Blueshift- shifting the world of DeFi on Cardano and beyond
Feb 28, 2022
Blueshift`s ambition is to revolutionize the way users engage with the decentralized crypto market while unlocking the potential of a sleeping giant. Cardano`s community and immense available liquidity is the foundation for Blueshift`s highly innovative AMM protocol, which pushes the DeFi frontier beyond the Cardano ecosystem.
Combined with Milkomeda`s Layer-2 blockchain technology, Blueshift introduces a user-friendly, community-driven, and highly capital-efficient DeFi 2.0 solution that is neither limited to chains nor facing the issue of high gas fees.
Crypto users will benefit from single-sided token liquidity, cross-chain liquidity portfolios, zero fees for arbitrage operations within and across portfolios, and community-driven portfolios.
The benefits and new cutting-edge options that Blueshift offers are countless, and each benefit seems almost too good to be true, however, it will all become a reality soon — with the deployment of Blueshift’s DeFi 2.0 technology.
Merits of the Milkomeda chain
For a user to understand the benefits of Blueshift, it is important to be aware of what the Milkomeda chain offers, because after all — Blueshift’s innovations and capabilities, which leverage Cardano’s potential, are unlocked by Milkomeda’s fundamental technological advances.
Milkomeda’s team vision can be easily understood through the following quote:
“Following Metcalfe’s law, tech products primarily accrue value based on the size of their network. This means that superior technology can give a slight edge but does not in itself guarantee a definitive win against established competitors.”
-Milkomeda’s Gitbook Introduction section
In short, Milkomeda’s team has set out to connect all EVM compatible chains, and in the future, non-EVM compatible chains as well! This can have a tremendous effect on the crypto space — as connectivity between chains has insofar been one of the largest hurdles in the blockchain industry.
However, building bridges is not enough, and Milkomeda’s team understood this very well. This is why they are building wrapped smart contracts that enable users to have the ability to use different chains whilst not having to move away from their own preferred chain and wallet.
In other words, users will be able to execute smart contracts for example, on Solana, whilst operating on the Cardano blockchain and initializing the TXs on the Cardano blockchain itself.
This has been a dream for many crypto enthusiasts, and now it is right behind the corner!
The multitude of Blueshift’s technology advantages
Given the multifaceted nature of Blueshift’s incredible value proposition, it is best to go through its advantages one by one in a comprehensive list.
Let’s dive right into these mind-boggling functionalities and benefits!
1. Double yield enabled by Cardano’s eUTXO model
It is a little-known fact, but it is quite important — the Cardano blockchain allows for the utilization of the same $ADA or CNT for both staking and liquidity provision purposes.
This means that Blueshift users will be able to get a double yield on their liquidity, as long as the liquidity is $ADA or CNT that can be staked via a Cardano wallet.
2. Operating in the center of a new, almost boundless crypto ecosystem
It is expected that for many blockchains in the future — Milkomeda will remain its only connection to the rest of the broader blockchain ecosystem for quite some time.
Hence, an AMM platform operating on this ‘relay station’ will generate significant benefits, synergies, and possibilities for its users.
3. Single-sided liquidity provision
Established solutions struggle with capital inefficiencies caused by trading pairs. Blueshift addresses this issue by introducing single-sided token liquidity provision.
Single-sided token liquidity will allow users to simplify the process of liquidity provision, balance their risk profiles with more tokens being available in portfolios, and, thereby, “virtually” integrate multiple pairs into one simple step of liquidity provision.
4. Liquidity portfolios
In DeFi 2.0, liquidity portfolios are a cutting-edge replacement for the liquidity pools that could be dubbed as DeFi 1.0.
Blueshift`s liquidity portfolios will allow for both single-sided token liquidity and any arbitrary combination of tokens, enabled by virtual pairs.
On Blueshift, advanced users will be able to create their own liquidity portfolios while also benefiting from public portfolios, which will also be community-managed in the future.
This means that users can either earn through providing liquidity to their own or public portfolios. Given the created transparency between the two, users are always able to compare the performance of their very own portfolio with public ones and thereby improve their trading skills and knowledge.
It is important to note that portfolios created by users will be only visible to them. In order to be used by other users, the Liquidity Portfolio will have to be constructed individually by each user.
5. Internal oracles
One of the root causes of impermanent loss in DeFi 1.0 are ratio swaps in pools. Instead of ratio swaps related to pairs, Blueshift utilizes internal pricing oracles in combination with liquidity portfolios and virtual pairs.
When a swap is initialized by the user, virtual pairs are constructed based on the Blueshift Reserve Model and the swap is executed. This means that pairs are created “on the fly” which allow for the best use of the totality of asset liquidities via virtual pairings.
Thanks to this combination of innovations, impermanent loss and price slippage can be reduced by up to a factor of 10 and, thus, an absolute minimum.
6. Personalized portfolios & zero fee arbitrage operations
On Blueshift you will be able to swap between liquidity portfolios that contain unique and non-standard combinations of tokens. Trading in the crypto space is about to become a lot more innovative and personalized!
Blueshift technology will offer users the possibility of zero fee arbitrage operations — in exchange for reduced virtual reserves. Arbitrage swaps come with a higher price slippage of about 10 times that is caused by reduced virtual reserves. While this effect is balanced by zero fee arbitrage operations for arbitrageurs themselves, arbitrageurs in this way likewise enable an about 10 times impermanent loss for liquidity providers.
At the same time, arbitrageurs can decide themselves whether to choose normal or reduced reserves. In the case of reduced reserves, the risk of a potentially higher price slippage is balanced by the ability to use the zero-fee options.
More concretely, this means that arbitrage operations with reduced reserves become profitable when the price difference between an external market and Blueshift’s market is less than the trading fee, which is 0.3%.
In the case of a less than 0,3 % price difference, arbitrage transactions with full reserves are still unprofitable, whilst arbitrageurs with reduced reserves and zero-fee utilization will be able to complete an arbitrage transaction and realize a net positive outcome.
7. Professional & Automatic Portfolio management
Blueshift will not only offer liquidity portfolios but also open them to the community for governance purposes. In this community-driven approach to portfolio management, Blueshift DAO councilors will whitelist professional portfolio managers, who can propose changes in liquidity portfolios. The community will then vote upon these changes via the DAO.
The manager, or managers, will be selected and replaced according to their performance.
8. Farming and Yield pools
Liquidity providers will receive LP tokens for adding liquidity to portfolios. These can be staked into so-called `Farms`.
Liquidity providers can earn up to 60% APR for staking their LP tokens in ‘Farms’.
On the other hand, BLUES utility token stakers will get about 72 % APY for staking their Blueshift tokens.
9. Significant APY via various blockchain mechanisms
The unprecedented APY that Blueshift will offer is derived from four different APY generating mechanisms:
1) Portfolio APY, related to the growing market value of their portfolio shares.
2) DEX APY, related to trading fees.
3) Farm APYs, related to gains from farming and yield pools
4) External protocol APYs, related to revenues gained from supplying liquidity to partner protocols, e.g. lending.
To maintain the staking APY of the utility token BLUES, which will be the foundation of Blueshift’s ecosystem, the token will have a controlled minting and burning process — ensuring the stability of the BLUES staking APY.
10. Controlled minting & burning process of the utility token
The accumulated protocol fee is exchanged for Blueshift tokens on surplus auctions where token holders can bid their tokens to receive the fee. After the auction has ended, the protocol burns the tokens received from the winning bidder.
This event will be triggerable either by the Blueshift team or at a later stage — by a community consensus achieved via the DAO.
The community will likewise be able to control the minting process, which will, in turn, reflect on liquidity provision and staking rewards.
Blueshift — Reaching the Apex
Blueshift will lead the paradigm shift towards DeFi on Cardano with its novel solution.
Leapfrogging established DeFI 1.0 solutions, it will provide a user-friendly, community-driven, and highly capital-efficient DeFi 2.0 approach to Cardano’s ready-to-launch DeFi scene.
With the launch on Milkomeda, and powered by a unique capital-efficient AMM and community-driven asset management, Blueshift is set to cement its status as a pillar DeFi primitive on Cardano and outclass industry-standard AMM DEX primitives.
Cardano, Solana, and Avalanche are our first targets that will get supercharged by Blueshift’s technology, and afterward — the rest of the top EVM chains are planned to be integrated with our technology, one by one.
Keep in mind that Cross-chain integration will be facilitated step by step, with the first chain integrated being — Cardano.
To find out more about Blueshift, we encourage readers to go through our Investor Deck and Whitepaper — which can be found on our website.
If you believe in our vision — join us! We have an immense and dedicated Twitter community as well as an equally enthusiastic Telegram community!
The Paradigm has shifted. Welcome to DeFi 2.0!
Don’t miss it.