Looking deeper into Excalibur
As Excalibur matures, it becomes increasingly important to ensure that our current users and prospective users have access to clear, concise content that keeps them informed and, ultimately, confident about the state of both the protocol and its development.
Therefore, this deeper look at Excalibur starts that journey, with a succinct summary of both the key elements in our overall vision and the progress that has been made towards our goals.
Since inception, Excalibur has repeatedly executed on its primary goals. Before we dive into key elements of the protocol, it seems prudent to highlight some of the achievements made thus far.
Excalibur began with a fair launch based on a custom model which was hugely successful. One element of this was the lack of any private allocation for the team. The project was also fully funded by the team, helping to avoid the bad incentive models that can come with the usual funding frameworks we see in the defi (decentralised finance) landscape.
In the same vein, the salaries for team members come exclusively from fees accrued by the protocol and are automatically distributed at the same time as all other allocations sent out by the FeeManager code.
Additionally, when it comes to security, we have repeatedly shown not only our understanding of the importance of due diligence, but also our ability to pivot, adapt and evolve aggressively where need be to protect users and user funds. All raised issues have been resolved and our custom “Master” code implementation has been praised by Paladin as a fully unit-tested codebase. You can read more on that, here.
Below, we’ll structure out dive into the current state of Excalibur into three parts:
- Fees, rewards and long term vision
- Excalibur the AMM
- Yield farming on Excalibur
Let’s get started.
Part 1: Fees, rewards and long term vision
Excalibur exists in a competitive market space, with plenty DEXes and AMM’s on Fantom. One of the ways that it defines itself is through the unique value proposition of its fee handling, redistribution and allocation.
There are three, prominent focuses for Excalibur and the team:
- We want to fairly reward those that participate in the Excalibur ecosystem. Therefore, we have a meritocratic approach to the direction of protocol rewards, instead of universally sharing equal rewards between all LPs (liquidity pools — see here).
- By maintaining flexibility in our distribution of rewards, we are able to pivot and flex based on changing environmental factors — for example, as we move towards a bribing and gauge based system, we will be able to easily redirect fees for allocation there.
- Incentivising long term staking with Excalibur and encouraging real, consistent commitment to the protocol from users.
Deposit Fees and Swap Fees, in Detail
Whenever users deposit funds onto Excalibur, those fees are paid directly into the Excalibur FeeManager contract.
The FM also receives swap fees that aren’t allocated to liquidity providers. The distribution of these swap fees is flexible and can be modified — as per our intended aims above. However, in order to create an iron-clad guarantee to liquidity providers, at minimum 50% of swap fees go to liquidity providers. It is impossible, contractually, for it to be any less than that 50%.
It is also worth noting that in some instances, a portion of those swap fees may also be paid to approved partners — there’s more detail on that here.
Once the funds have reached the FeeManager contract, there are set (but flexible, as outlined below) allocations for different destinations.
Dividends take the lion’s share of the FeeManager fund distribution, with a minimum of 50%. These are shared with GRAIL holders. More on GRAIL, here.
DAO treasury — up to 40% of FeeManager funds can be set aside for this governance-controlled funds, used for partnerships, marketing campaigns, but also POL or buy-back and burn.
The Team and operating funds can have up to a maximum of 20% of these funds redistributed to them.
SAFU Fund — the SAFU fund is a safety net, intended to cover black swan events, hacks or other setbacks that are common occurrences in defi. Between 2% and 10% of funds can be allocated to the SAFU fund.
A Dual Token System
The dual token system that Excalibur uses, with EXC (you can find out more about EXC, here) and GRAIL, is built with the same core principles that guided the unique fee system outlined above. We want to incentivise long term commitment to the protocol and to be able to flexibly distribute rewards both meritocratically and intelligently, with our long term vision in mind.
As a result, native staking, which encourages this long term commitment, is unsurprisingly very favourably rewarded — the amount of rewards is directly proportional to the platform’s success.
The DAO Treasury
With up to 20% of funds potentially being distributed to the DAO treasury, it is worth expanding upon how the DAO treasury fits into the long term ethos we are elaborating on in this section.
The treasury includes POL (project owned liquidity, as mentioned above) and single assets, which gradually accumulate over time. One of the DAO’s primary functions is to make decisions that are beneficial to EXC holders. The bonding programme is a good example of a well thought out, deliberate set of choices to encourage long term, sustainable growth and to add more liquidity to the DAO. You can find out more about bonding here.
Part 2: Excalibur the AMM
Excalibur’s Unique Proposition
There are plenty of AMMs (Automated Market Makers — detailed definition here) in the defi universe.
As mentioned several times already, Excalibur is keenly interested in long term, sustainable growth. As such, much of the reasoning behind key infrastructure decisions for the AMM portion of the protocol are built with that lengthy horizon model in mind. We’ll cover three key elements:
- Custom swap fees
- Swap referrals (briefly touched upon above)
- Trans-fee mining
Custom Swap Fees
Not all trading pairs end up being equally used and thus, they should be adjusted to better fit their current status within the market. Generally, UniSwap V2 forks do not offer the flexibility for each trading pair to have their own swap fees — we do.
When projects choose to launch on Excalibur, particularly as their primary source of liquidity for their project, they can then configure a specific swap rate that best fits their strategy. There are a couple of ground rules; all new pairs are set to a 0.2% swap fee by default, with a maximum swap fee of 2%.
These swap fees can only be implemented by the Excalibur team.
This offers Excalibur another dial that can be adjusted and tweaked to incentivise ideal routes for swaps.
This unparalleled flexibility in defining swap fees for different trading pairs is not only alluring to projects looking to launch, but it also makes logical sense for the protocol and, by proxy, for those invested in Excalibur’s long term vision.
Swap referrals are another mechanism that Excalibur uses to build partnerships and encourage collaborative ventures across the broader Fantom ecosystem.
Partnered projects are approved by the Excalibur team, which then places them on the whitelist. Swap referrals cannot be used by individual users or non-approved projects.
Once whitelisted, partnered projects can have their referral address included in each transaction that runs through Excalibur via their dapp, resulting in some of the swap fees generated from that instance running back to the partner project. Those partner projects than have a vast array of options when it comes to using the referral fees they gather.
This continues to push our fundamental principle of smart, meritocratic rewards.
Trans-fee mining (or transaction fee mining) is another option in Excalibur’s toolbox for encouraging both adoption and to differentiate itself from its competition. When users swap on selected trading pairs (these trading pairs must be whitelisted — which is another reason for protocols to partner with Excalibur), up to 100% of their transaction fees are returned to them as EXC, the Excalibur native token.
These reimbursed fees, in the form of EXC, are then claimable from the Excalibur dashboard. For users, this directly and handsomely rewards them for trading with Excalibur.
Part 3: Yield Farming on Excalibur
Preamble on Justifications
Yield-farming for the sake of yield-farming is a downward spiral that plagues the broader world of defi. In contrast, Excalibur has a specific underlying justification for all of the pieces of its yield-farming approach.
The dual token system of EXC and GRAIL, as well as the Time Vaults, are focused on building predictable, long-term liquidity for Excalibur. As such, the decisions around yield farming that were made initially, but also the decisions that will be made moving forward, seek to fulfil this goal.
Let’s expand on:
- EXC and GRAIL
- Time Vault Staking
Rewards for yield farming on Excalibur come in two, distinct flavours. We will look at those first.
EXC Pairs and GRAIL Rewards
If you are yield farming an EXC based pair — for example, EXC/FTM — then you will be rewarded in GRAIL.
GRAIL is the shareholding and governance token for Excalibur. Currently, GRAIL is only obtainable through yield farming EXC pairs and does not currently have an associated price and is not liquid. It can be redeemed for EXC, but the potential of its long term value and its current relative scarcity incentivise long term participation and token-holding.
Non-EXC pairs and EXC Rewards
Alternatively, if you choose to yield farm a non-EXC based pair — for example FTM/USDC, then you will be rewarded in EXC.
EXC is a classic yield farming token, designed to incentivise liquidity on Excalibur.
Slots and Regular Staking
Unlike other AMMs, for each farm on Excalibur uses have “slots” available to them for staking. In contrast, most AMMs would allow users to simply stake their position with the platform in question. This would mean providing their LP (liquidity position) receipt tokens to the protocol, in exchanged for higher rewards, as staking represented a longer-term dedication to that protocol.
On Excalibur, one slot is available for the traditional staking model. However, Excalibur innovates on this more traditional model and offers two more slots. These slots are dedicated to Time Vault staking.
Time Vault Staking
With longevity in mind, Time Vault staking offers users the opportunity to use their remaining two slots on a farm to create long-term staking positions for greater rewards. Users that stake their positions in Time Vault’s receive all the rewards available to them in a traditional staking slot, along with bonus rewards. These bonus rewards are amplified proportionate to the amount of time they choose to lock their stake.
A locked stake cannot be accessed until the end of the agreed period. If a user chooses to stake for the maximum period, they will receive the maximum bonus rewards as well as the regular rewards for a normal staking position. The longest Time Vault available has a 30 day duration and offers up to 50% additional rewards compared to a traditional staking position.
Whilst regular staking rewards can be claimed at any time, bonus rewards have a catch — they can also be claimed at any time, but doing so will reset the lock and restart the countdown to being able to completely access the originally locked funds.
Additionally, it is worth noting that users could have up to three positions open on one farm, utilising all three of their available slots.
For example, a user could have:
Slot 1: A traditional staked position earning rewards
Slot 2: A Time Vault staked position, for 15 days, earning rewards and bonus rewards
Slot 3: A Time Vault staked position, for 30 days, earning rewards and bonus rewards
Having a range of slots and staking types available offers users the maximum amount of flexibility possible.
You can find a detailed overview of Time Vault staking here.
Looking Towards the Future
Having worked through the current state of Excalibur, it is worth noting that development does, of course, continue at pace. The next big, impending update will be Phase 2. More on this in due course, but Phase 2 also has clear aims; it will focus on addressing token supply concerns, on improving the structure of GRAIL and also, excitingly, will implement our unique take on gauges and bribes.