Ping Chen | iGain: The Antimatter of Impermanent Loss

a video recording we will be publishing this video to upload to the youtube channel on typing student channel so ping something is the founder of package tag um he's done a lot of things and he's also the founder of palace um so i thought you were going to talk about zero knowledge troops and i turned up yeah maybe next time okay so um my topic is a new product so this is our new project and we named it ican which stands for impermanent gain and the opposite of incremental loss and this belongs to and i have roughly four and a half years experience in developing a platform that especially so the topic is basically a solution of the employment laws of being the department provider or so-called automatic market maker or maybe the most famous name is unique so there's no difference between uh being a market maker and unisa or a traditional matter maker in terms of how they profit and what the risk so when you want to be a marketer you need to have a good strategy to place buy and share orders in order to make some profit so the the potential profit of being a marketer is basically the the spread between the buy and sell order replace and the risk of worth is that if the market price fluctuates a lot then we might get some networks and due to this reason we don't see traditional finance has a good cooperation between professional market maker and individual assailants because here's some so traditionally we don't see people being we don't see the the lemon bean market maker but it's too risky for them and they they cannot trust the manager to take off but in blockchain we have a full staff called uh mlm which has uh to determine strategy of the market so when you provide security to start a market making product then it shows that you agree with the potential so it's a good invention plus this kind of mechanism eliminates the the the requirement of trust like when you deposit them it seems valuable but then we get some new problems with this kind of motivating mechanism which we call internal laws and it's basically due to that this kind of automated mechanism are quite inflexible this means it's pretty easy to for outside behavior to address against that kind of money making standard so when you are being recruited provider of winning windsor you'll get a special kind of loss called internal load which is i think it is the function of price change so uh in unisa if you want to be a money maker you have to have 50 50 percent of two kind of currency and you probably thirty to become the provider of them to get here so compare with not speed multimaker if you are just holding two kind of currency and to make it a simple question we assume the one one side of that there is a stable point like this dollar and the other side itself another one is uh for example this so since one is fit and the other one fluxes you can throw function like the red line which is uh assume one kind of currency is not have been transferred and the other one that says price blood pressure then the total position may have a net value due to the price of this stream so let's say the price of these down to zero then you'll have a 50 value of the original position because uh the stable point part is remaining the same and if the price of this goes up then you are going to have uh like half of the five strikes because uh only fifty percent of your performance is stable but if you are depositing those two currencies into unison being the recruiting provider then the actual um can also be the blue line and as you can see it's always worse than just holding that kind of curve and as i mentioned the reason is mainly because by being sad a property provider of unisoft it's quite injectable and people can have itself from you from just price reasons so um let's say the price goes up then it turns out that people will use stable control by away your which is more valuable so you'll get a net loss between uh just holding and a straightforward solution of this could be hedging the price change of the non-stable current so let's say you departed your points into unison you'll be you are being the liquidity provider of your scholar and peace and at the same time you serve the same position of if and you can see it's still not so good because it's not on this life not uh eventually still suffering from some new type of laws and that's what we call incrementals so uh it's an extra loss from the capital cll and the formula of improvement loss will look like this so as you can see it's it's not so symmetric but in the face i still move it but now when the price drop or the number is and basically it's a kind of synthetic asset and the beauty of genetic asset is that since it is not a real asset so you can have a merely arbitrary [Music] arbitrary payoff and have some arbitrary formula and that makes things very flexible since we can find a counterparty to form a contract like this then any kind of problem so because you transfer the risk to your counterpart instead of fixing it so you can simply compare the formula again and il and you'll find out this uh but upside down so uh the concept of holding eigenfocus is basically holding a case of il so if you hold one ig it should properly offset the incremental loss of let's say the same position of the 34 level token so uh previously the payoff of being the returning provider of let's reporting money and stuff so you'll get some extra profit from many world which is the government's focus and of course you'll suffer from and at the end you have an extra loss for internal loss and since we have again now if you also want to be a recruiting provider of this entire ministry you'll still have from this but if you buy the ident open at the very beginning then you'll pay some premium and then that will offset all the internal laws so the record theoretically this and this will be the same but since this is returning and is that some uncertain so we believe people might want to have some this kind of asset to make the degree providing more certain so the whole process would be like this first since it's a binary synthetic asset opportunity to have a counter target to take both risk and premium so in our model we are going to have let's say a token and then end up in the counterpart so at any time the value of one a plus one thing for equals to one thousand it's 50 percent and then there will be a recruiting provider of program so the process will be you need to meet up one a and one will be broken simultaneously to make the end of the game but you can swap a against three of the best way to have a pure donald short provision and then when uh the period ends then it will come to a settlement process so we'll get uh the price they have from the oracle to calculate the price change representation and then um get how large is the employment settle down the net value of the particles so here's some data i get from the price log website i guess from the last year and then compare it every 30 days so since when you have 365 days i have 335 data points so i come here the five change for its 30 days and then get the price ratio and then get the superman loss and surprisingly the the average monsoon uh i only quite low it's about 1.18 percent and depends on 1.5 percent of uh splintered music is a little bit big but the maximum of the marketing uh internal law is like around 85 it's still not not so nice so it could be pretty reasonable to set to focus the price was about 102 percent but of course since this is like the sort of kind of option so at the beginning of the quarter we will have something so i'll say like maybe two or three percent 0.02 03 probably fixed the first one is uh the capitol details because currently the id model don't have leverage so you need to pass it one dollar to have one a.m position and that would be very very critical consuming but since we want invaded as well decentralized different class families project so we cannot make it fast-paced so what we need to maybe fully follow us and the second one is important because we use another a m model to form the market of uh again and that payment model itself will have some time again so you make it a recursive problem yeah it is not so good yeah so first i think we need to introduce the leverage factor into this model because uh as i mentioned the average uh io is about one point something percent is quite low comparing one dollar so let's say that we set in 10 bucks leverage will be a good idea so uh before we have a fail like this the type of b should be the same as the variable again so this yeah the angle is zero than the title and since we can set up enhanced levels to the value of b they will be stressed through one dollar when the value of ig is the same or larger than 10 percent so in this model there will be some uh there will be some kind of possibility that we cannot offset the whole policy i will get uh higher than i'm gonna say from this one from the value after 0.

1 then the five also and the second problem of uh again will be risk of being determined provided but let's say market market-making problem because like i think over and over um are all suffering from this kind of problem they said they themselves have to be the liberty provider of their the upset and that cost them a lot of money because it's always will spend so only the party owner would like to be like here's two interesting uh uh behavior of the type of person the first one is it's luxury a lot like when you buy production itself already not so friendly to and the being one is the text of action to drop over time like that saying and you want to buy a full upsell of this and if there's the same return let's say maybe the price is 400 and you find a call up from say 500 but for the time period the time window about 500 in one day is not so possible by one year ago so since they have different possibilities the price of uh option will be different so uh treating the liquidity provider of option for software because the price of that organized outcome is always dropping all the time so you give yourself the the option to need to locks so i say it is like always loose so uh the first propose is to make a dynamic feed like the universal is the fee of starting this set to and we propose to make a function of p in raising over time so you start from the same point start praising all the time so by doing so and we can visualize it sure but i hope that can somehow protect the literature provider so there's a larger script so it's harder for you know outside people you might not need to sell it because you can just hold it the end of the water and then get the price sample there's no liquidity after exactly hope that makes sense i think that's are there any corresponding concepts like what are they in traditional environment do they correspond to something uh these types of mechanics because they are marked with makers and stuff in traditional financial markets so it's just self-responsive i think no because as i mentioned the the price of high gain is the upper table il and since it's not so symmetric this means like rice and health have different il yeah so it's quite unique because we don't have central formula before when there is a normal kind of field we have like a five-string option but they are symmetric but in this case we have a new definition of the the value the central uh itself so it's not it's not like an insurance of the whole position confidence it's a synthetic asset and it's quite is nearly based on the price channel of topic let's say it's different oh because um you say that you can build uh intimidating thing on another republican problem and if you say it's like a recursive intensive kill yeah is it really like uh that the most powerful sense of things you feel on top of it or the implement those problems alleviates when you are traveling uh i believe yes because if the underlying token is this and we got il you should statistics it's not fun type but since the price of id might travel even more so i assume building another id on top of that want to say don't solve the problem any other questions relating to this [Music] different game contract what do you mean the formula yeah uh do you need i asked google for it okay i think there's like a reddit post for example showing the formula and the input is the price ratio so any kind of obviously you can oh maybe the your oh to relate to the bottom turning bottom concealer only the question uh i mean yeah of course you can obtain any other terminals and maybe populate other payoffs but they will make a totally different product but if you want to catch against the whole position of your recruiting survivor sure then you need to consider life change and generate it and also maybe the main reward but first that will make things a little bit too complicated and second i assume people buying again to nearly offset il and then still capture the value of stockton but you know a lot about uh um