Ethervista started as a decentralized exchange (DEX) combined with a memecoin issuance platform on Ethereum. The project's vision is to become a multichain DeFi hub with a full suite of tools to serve user needs.
As a latecomer to its giant predecessors like Uniswap or SushiSwap, what strategies does Ethervista have to create a competitive advantage? In this article, we will explore the differences in the project's operating model.
Ethervista AMM
The core of Ethervista's operating model and the fundamental competitive advantage lies in this new AMM model.
The project argues that traditional AMMs are challenged by a lack of incentives for projects to operate in the long term. This is because projects tend to focus on price action, which leads to stealth token dumping or rapid liquidity withdrawal. The same is true for Liquidity Providers, as incentives are not sufficient to keep them providing liquidity in the long term.
Ethervista has introduced a new AMM model, or rather a new transaction fee collection and allocation mechanism to stabilize the interests of projects and liquidity providers.
First, for traditional AMM models, typically Uniswap, they usually apply a token fee for each transaction, which is added to the pool until the liquidity provider leaves.
Implementing this mechanism will expose Liquidity Providers to additional token depreciation risks in addition to Impermanent Loss. Its advantage is that it helps the liquidity pool to continuously expand, thereby minimizing slippage in the long term (however, there will be higher than usual slippage in the early stages).
Ethervista applies a fixed transaction fee mechanism in native ETH. Each transaction on Ethervista DEX will incur a fixed fee in USD calculated on ETH, which is set by liquidity pool creators (P Creators) when they first create a pool.
There are 4 transaction fee levels set up including:
LP buy fee: Fixed USD fee paid to liquidity providers on each buy transaction.
LP sell fee: Fixed USD fee paid to liquidity providers on each sell transaction.
Protocol buy fee: Fixed USD fee paid to the project on each purchase.
Protocol sell fee: Fixed USD fee paid to the project per sell transaction.
The variables must be set to a minimum of 1 USD and Ethervista DEX charges 1 USD by default, so for every transaction that occurs on Ethervista DEX, the user needs to pay at least 3 USD in ETH.
For example, for VISTA which is the main token of the Ethervista project, when a user makes a transaction to buy any amount of VISTA, he will be charged 10 USD in ETH and 15 USD for a sell transaction.
The Protocol fee is transferred directly to the wallet address or smart contract set up by the Creator to serve the project development activities. For example, Ethervista is using this Protocol fee to buy back & burn their VISTA tokens. At the time of writing, up to 2.9% of the total supply of VISTA tokens has been burned after less than 3 weeks of operation.
LP fee is a fee for liquidity providers, it is continuously and "cleverly" distributed to LPs through a variable called Euler (named after the brilliant mathematician Leonhard Euler).
Ethervista's Euler Reward Distribution Mechanism
In traditional AMMs, liquidity provision rewards are distributed based on the number of LP tokens held. Ethervista adds an Euler variable to create an additional time vector for the reward distribution. This means that instead of just relying on the number of LP tokens held, Ethervista measures the exact rewards that LPs receive on each transaction, the longer they provide liquidity, the more rewards they receive, creating fairness for early liquidity providers with small amounts compared to later liquidity providers with large amounts.
Specifically, it works as follows, when LP Creator initiates a trading pair, an Euler variable will be created to track the liquidity reward, it initially has a value of 0 and is updated after each transaction according to the formula below.
In there:
Euler: euler value to calculate
Euler-1: previous euler value
Fee: transaction fee collected from transactions
LP supply: total LP supply at the current time
When a new user provides liquidity to that trading pair, in addition to the LP tokens received, an initial euler variable called euler0 is assigned to that LP with a value equal to the current euler value Euler0 (of the LP) = Eulern.
After a period of operation, liquidity providers will receive a series of euler variables as follows: { Euler1, Euler2, Euler3, Euler4.. Eulern}. This series will be the basis for calculating the reward received by that LP. Reward calculation formula:
In there:
Reward: liquidity provision reward (ETH) received
Eulern+1000: value of euler1000 (assuming reward is calculated at euler 1000)
Euler0: the value of euler0 is initially assigned
LP: number of LP tokens held
Such a reward distribution model will help track rewards from liquidity provision activities accurately on each transaction. This will create a fair environment among liquidity providers and encourage them to maintain long-term liquidity provision.
Going back to the content of Ethervista charging fixed transaction fees in ETH instead of tokens in the trading pair, we will dig deeper to see its impact through a specific example:
Given a two token A/B trading pair with current liquidity pool value of 1,200 A tokens and 400 B tokens.
Both AMMs Uniswap and Ethervista work on the K = X * Y model
From there we can calculate the liquidity constant K = 1,200 x 400 = 480,000
The reference price at the initial time is P = A/B = 3
Suppose there is a Swap order token A => B with volume A = 3 tokens. The changes in the Pool are as follows:
Number of A' tokens = 1,203
Number of tokens B' = K/A' = 480,000/1,203 = 399,002
New reference price P' = 3.015019
Now is the time to make a difference, for Ethervista, the project collects directly in ETH, this fee is transferred to private addresses not related to the liquidity pool, so the parameters in the Pool of the trading pair come to an end here, no more fluctuations.
With Uniswap and most other AMMs on the market, the transaction fee is calculated in tokens (in this example, token A), which are added back to the liquidity pool. Therefore, the new pool dynamics are as follows:
Number of tokens A'’ = A' + fee = 1.203 + 0.009 = 1,203,009
Number of tokens B’’ = B = 399,002
Constant K has changed K’’ = A’’ * B’’ = 480,003.591
New reference price P'’ = A'’/B’’ = 3.015041
Thus, for Uniswap, after each transaction, a small amount of tokens is added to the Pool, pushing the reference price further away than Ethervista, but in return, it increases the liquidity constant K. In the short term, Uniswap's price may fluctuate more, but in the long term, when the constant K increases significantly, the slippage in each transaction will decrease a lot compared to Ethervista.
As for Ethervista, although there is no mechanism to reduce long-term price slippage, stability is maintained throughout.
Read more: AMM Platform Knowledge - Liquidity
As mentioned in the above section, the smallest fixed fee that a user has to pay is $3/transaction, we will try to calculate to see what transaction volume will benefit the user.
Old traditional DEX v2 versions such as Uni, Sushi or Pancake apply a fixed fee of 0.3% of the trading volume. Version v3 applies a Fee Tier division form chosen by LPs ranging from 0.01% to 1%.
At a minimum, a swap order on Ethervsita incurs a $3 fee, corresponding to $1,000 of trading volume on Uniswap v2 and $300-30,000 on v3 depending on the fee tier. So if the trading volume is larger than $1,000 and the pair does not have a v3 version, Ethervista is more profitable.
However, that is the minimum case, LP Creators rarely set that fee, usually pairs on Ethervista will have a fee ranging from $5 - $10/transaction.
Look at the boxes highlighted in red for an example of a $10 fee. To benefit from the swap fee, the trading volume on Uniswap v2 needs to be greater than $3,300 and between $1,000 and $100,000 on v3.
Overall, in terms of average users with small to medium trading volumes, there is not much of a competitive advantage for Ethervista, especially for v3 pools with small fees, Ethervista has even less of a competitive advantage.
Looking at the overall operating model, Ethervista is looking to build more value for the project and liquidity providers.
Ethervista aims to drive projects to benefit from volume rather than token price. This incentivizes them to go the long haul and generate more volume. On the one hand, this model also incentivizes LP commitment through a passive income stream in native ETH from transaction fees.
Memecoin Issuing Platform
Memecoin is probably the hottest keyword of the cycle as every ecosystem wants to claim a piece of this keyword. I don't know how many memecoin seasons have happened, but this movement has never cooled down.
Starting with PEPE on Ethereum in mid-2023, followed by Bitcoin memecoin in late 2023 early 2024. Then came an unprecedented memecoin season on Solana that transformed the network’s brand identity from a high-speed Parallel Blockchain to a “meme chain,” with Solana’s peak month generating nearly half a million new tokens. Then came Base meme season, Ton meme season, and Tron meme season.
Going full circle but since the Ethereum Spot ETF event, the network has become strangely gloomy. Ethereum and meme enthusiasts are always looking forward to the memecoin movement returning to this ecosystem with the largest liquidity in the crypto market.
Similar to pumpfun on Solana or sunpump on Tron, Ethervista is aiming to bring the memecoin movement back to Ethereum through their memecoin issuance platform.
Ethervista provides a fairly simple toolkit for users to create their own token. Users just need to enter the name, symbol, total supply and press Create.
Unlike other memecoin issuance platforms, Ethervista is not exactly a fair launch, its token issuance process is divided into 3 main steps: token creation, LP addition and finally metadata update.
As for pumpfun or sumpump, the entire supply will be released to the market in the form of a bonding curve, and the creator still needs to spend money to buy if he wants to own it. As for Ethervista, the creator can arbitrarily add any amount of liquidity pairs. This can be confusing for non-techies in checking whether the entire supply of tokens has been released to the market or not.
According to data from Dune, after 3 weeks of operation, there were 959 token pairs created, 198,000 swaps, and $458 million in trading volume.
Read more: Should we choose memecoin or technology this cycle?
Features under development
AMM DEX and memecoin launch are the two most prominent features of Ethervista at the moment. Besides, with the vision of becoming a multichain DeFi hub, Ethervista is developing other functions including:
Lending
Futures Trading
Flash Loan No Fees
With the core concept of ETH native fixed fee, it is expected that the above features will also apply a similar model.
In addition, earlier this week, the project successfully deployed to the Base and Arbitrum networks, and soon to Soneium (Sony's Layer 2), a step forward in realizing its multichain vision.
Conclude
Overall, with Ethervista, I personally evaluate it as not a breakthrough in technology or operating model, but an innovative choice. Ethervista has chosen a model that highly incentivizes projects and liquidity providers, motivating them to maintain long-term commitment, the remaining issue lies in user acceptance.
Memecoin is probably also a good choice for Ethervista, instead of having to compete directly with DEX giants, building an ecosystem around the memecoin movement will help the project breathe easier during the startup phase.
With what the project has done and is doing, it can be seen that the Ethervista team is knowledgeable and experienced in the crypto field.
Above is information about the operating model of Ethervista - multichain DeFi hub & memecoin launch, hope the article can help you in the research process.
#kudodefi #ethervista $view
