代币月涨40倍，详解“人人都在赚钱”的套利协议Peapods

Original - Odaily

Author - Nan Zhi

On-chain data shows that the Peapods Finance protocol token PEAS has increased by more than 21% in 24 hours and is now trading at US$10.01, a 40-fold increase in one month.

Odaily will analyze the operating mechanism and process of the Peapods Finance protocol in this article.

Detailed explanation of the agreement

Main business introduction

According to official documentation, Peapods is a decentralized, permissionless, trustless on-chain volatility farming protocol that does not rely on oracles or external price sources. Peapods enables users to take advantage of the high volatility of crypto markets and gain access to income opportunities from any liquid asset. Peapods calls this modelVolatility Farming。

Using Peapods, users can package any one or more liquid assets into an ERC-20 token. The encapsulated tokens are called Pods. The Pod token (pTKN) is always fully supported by the original asset (TKN), and You can unpack and revert to the original asset at any time. This means that the value of Pods will always be consistent with the underlying asset, and arbitrage opportunities will arise when the prices of TKN and pTKN deviate from the unwinding cost. These arbitrage trades generate protocol revenue that benefits pTKN holders, LPs, and PEAS holders.

operation flow

Odaily summarizes its official case as follows:

• Take the PEAS token and its pTKN token pPEAS as an example;

• Assume that the original price of PEAS is 95 USDT. Due to the rapid increase in demand to 100 USDT, the corresponding price of pPEAS has not yet increased and remains at 95 USDT;

• Due to the price difference between PEAS and pPEAS, users can perform a series of arbitrage operations;

• Purchase pPEAS for 95 USDT through Uniswap;

• Unwrap pPEAS assets on the Peapods platform and pay a small fee;

• Sell ​​unwrapped 100 USDT of PEAS on Uniswap for profit.

In the case of the opposite price difference, users will first buy low-priced PEAS, package it into pPEAS, and then sell high-priced pPEAS for arbitrage.

Peapods said,Everyone benefits from this process：

• Arbitrageurs capture the spread;

• The pPEAS collected for encapsulation or unblocking is destroyed, increasing the overall value of pPEAS and benefiting pPEAS holders;

• The remaining fees are used to purchase PEAS tokens in the market, benefiting all PEAS holders;

• 10% of PEAS purchased in the market will be destroyed, which will help reduce the total amount;

• 90% of market-purchased PEAS are distributed as rewards to users who stake liquidity.

So where does the money earned come from? Is it true that no one loses money? Odaily will be analyzed later.

Fee collection

Peapods said that during the process of creating a Pod, the creator can customize the cost of the Pod. These adjustments will change how specific Pods manage fees and distribute rewards. There are five key Pod fees when a Pod starts, namely:

• Packaging fee: charged when the packaging is pTKN

• Unblocking fee: Charged when pTKN is unblocked to TKN

• Burn fee: distribution rate when pTKN is destroyed

• AMM fees: DEX transaction rates

• Partner fee: fee distributed to Pod creators

Higher Pod fees mean a higher number of tokens burned and rewards distributed per arbitrage, which may also reduce the number of arbitrage opportunities.

What is the essence of Pods? ——Artificially created slippage and arbitrage opportunities

What is the essence of Pods? Odaily thinks it is Artificially separate liquidity, creating transaction slippage and corresponding arbitrage opportunities, the arbitrage process works on two bases:

• The encapsulated token pTKN needs to be encapsulated with the native token TKN;

• Users will also need to provide liquidity for pTKN and other tokens to DEXs such as Uniswap.

Such a setting occupies the amount of the native token TKN that can be used to add liquidity, and also occupies the amount of other-side liquidity such as ETH and USDT.

In the official case, due to the demand for buying PEAS rising from 95 USDT to 100 USDT, users can arbitrage the price difference of 5 USDT. If the assets used to provide liquidity to pPEAS are added to the LP of PEAS, the original funds purchased by the demand side will only increase the price of PEAS to 98 USDT (assumed).

Therefore, it is not that no one is losing money. In fact, the price of the buyer has increased in disguise, and he has paid more funds, and this overpayment of funds has been captured by PEAS.

Potential use cases

There is no essential difference between pTKN and TKN. Creating this kind of pTKN will not bring about differences in token use cases, but there may be protocol use cases in the following aspects:

• Project parties can create one large and one small LP pool for TKN and pTKN based on a specific token TKN. By controlling the small LP pool to raise the currency price, arbitrageurs can purchase the large LP pool to raise the currency price.

• Through repeated token arbitrage transactions, the income of LP providers is increased, thereby prompting more token traders to provide liquidity.