With the incredible amount of development and innovation in the blockchain and DeFi space at the moment, seeing SushiSwap emerge as having one of the most vibrant and influential communities is evidence of what a dedicated and engaged group can accomplish. Our belief is really that the sky’s the limit for SushiSwap, however given the pace of development of blockchains and other platforms, it’s difficult to ignore the importance of considering future opportunities for the community. Ethereum has propelled massive adoption and growth for SushiSwap, and we think that using that momentum to leverage the advantages of alternative blockchains will be key to SushiSwap’s next steps.
Our team has been farming, staking and investing in DeFi for the past eight months and we have been farming Sushi since day one. The concept of DeFi embodies everything that crypto is about - giving everyone a chance to access tools that were originally the domain of large banks, companies, venture funds and trading firms while maintaining the autonomy of each individual. Over the summer we witnessed explosive growth across the sector however due to sky-rocketing gas prices, these tools once again began to feel out of reach for the common user.
As time progressed, we found that to convert our ETH to WETH, swap a portion of it to SUSHI on SushiSwap, provide liquidity to the pool and then stake an LP token easily cost over $100. Perhaps for a single, long-term staking position this is acceptable, but when considering the need to move liquidity multiple times within a few days, it became apparent that this would become an ongoing issue.
Then Serum was launched. They built a decentralized exchange with a functioning orderbook on a high speed chain which cost pennies to use. We started exploring their functionalities and came up with an idea. Why not create a real orderbook style AMM on Serum? This would solve 3 large problems at once:
Expensive gas fees and slow transactions which discourage smaller traders and investors from taking part in DeFi liquidity providing and staking
Lack of limit orders and advanced trading UI for traders who want greater control
Fragmented liquidity across the market by aggregating all liquidity on a central order book for everyone to access
After considering how we might be able to solve these key issues by creating an AMM on Serum and Solana, we got to work building and Raydium was born.
More recently we saw the grant for building out support for SushiSwap on Solana and we really got excited. We love what SushiSwap has built; an amazing community closely engaged around an amazing project. If we could somehow work alongside the community to build out support for Sushiswap on Solana, we think the community would quickly see even wider reach while Sushi products would benefit from ecosystem-wide liquidity, fast transactions and low fees on Serum.
Raydium as a bridge for SushiSwap
We have been working on Raydium’s AMM and liquidity pool protocols since the fall of 2020 and have just launched on our platform. Similar to other AMMs, Raydium currently uses the constant curve invariant K = Y/X. This is the same equation that Sushi uses for its market making. Raydium utilizes this equation and prices orders on the orderbook according to the Fibonacci sequence to provide up to 20 orders at a variety of prices with some spreads as small as 20bps between them. In the future, we expect other liquidity providing models to be employed to take advantage of oracles and increased liquidity usage.
Raydium’s protocol is already able to support SushiSwap liquidity pools for the Serum orderbook. Additionally, after working closely with the Solana team on development over the past months and becoming well versed in the intricacies of this highly efficient blockchain, Raydium is capable of acting as a bridge and partner for SushiSwap’s expansion onto Solana. Moreover, bridges like Wormhole and Sollet.io already provide an avenue for ERC-20 tokens to be easily wrapped as Solana SPL tokens and transferred between respective wallets.
Working alongside Raydium would enable the SushiSwap community:
To expand its reach to the growing Solana and Serum community
To access additional liquidity from Serum. This includes Raydium’s own liquidity, that of other liquidity providers, as well liquidity from individual users and traders on Serum. Thanks to a central order book, SushiSwap would have access to all of the liquidity and order flow across the Serum ecosystem.
To quickly leverage Solana to achieve fast transactions, significantly lower fees and potential future features that may be otherwise limited on Ethereum.
To reinforce perceptions of SushiSwap as a DeFi leader and innovator.
Proposed collaboration framework
The SushiSwap community determines that the addition of a Serum and Solana based Sushiswap is an opportunity worth pursuing. We are excited for this opportunity to work with the community and welcome any feedback or suggestions on how we can best approach this.
The initial step would be for Raydium to work alongside SushiSwap to build support for liquidity pools and staking on Serum, then deploying on Raydium’s testnet. Cooperation between SushiSwap and Raydium on testing would ensure liquidity pools and staking features are fully operational and that they perform as intended.
The second step would be deployment of Bonsai pools and staking on mainnet.
We envision the end product as an additional offering on the SushiSwap page that maintains Sushi’s trademark UI and design but connects to Raydium backends, but we’re certainly open to suggestions.
Perhaps with a catchy on-brand name like Bonsai, but we’d love to hear your ideas on this!
Mockup for potential Bonsai Page
- The third step would be adding SushiSwap’s Raydium pools on Raydium’s own platform where they would be labeled as SushiSwap pools and would have access to Raydium and Serum’s wider community and liquidity. Again, here we’re open to feedback on what would make the most sense for both communities!
Mockup page for potential SushiSwap Farms on Raydium’s platform
- The final step, which isn’t really final at all but an ongoing journey, would be to continue working alongside SushiSwap to provide Raydium support for additional features wherever it seems most valuable for the community.
Points to Consider:
Liquidity Pool Farms
How to allocate rewards between SushiSwap Farms and Bonsai Farms for a single pair is one of the first questions to account for. A couple of options come to mind:
Separate for each pool: Rewards for Ethereum Sushiswap Farms could be completely separate from the Bonsai pools. Liquidity providers would earn rewards proportional to their share of the pools they are in, and only those pools. This would translate to attractive incentives for Bonsai pool liquidity providers initially.
As a % of Total Value Locked (TVL): Rewards could be allocated according to the percentage of TVL represented by liquidity providers for a given pair across both pools. This would mean incentives for Bonsai pools would be relatively small initially.
These are the two straightforward methods, but we’re interested to hear other ideas on what would provide the most value for the community.
Double Yield for SushiSwap’s first Decentralized Franchise Pool
With both SushiSwap and Raydium working together, there would be an opportunity for double yield, similar to what is discussed in the Medium MIRIN proposal for franchised pools. Providing additional rewards to Bonsai pools in the form of our native RAY token would be a great way we could add value to the community directly and get everyone excited about SushiSwap’s expansion to Solana and Serum. We’d like to think Raydium may be one of the first decentralized franchise pools to join the community!
RAY double yield rewards could be available on all farms or also adjusted in a similar manner to how Onsen rewards are selected by 0xMaki and a group of vetted SushiSwap community members. Raydium would work alongside the team to determine appropriate double yield rewards.
This would mean that all Sushiswap stakers on Raydium would not only get SUSHI rewards, but also get additional, free yield from RAY.
Fee incentives for LPs and xSushi Staking
To start with, we could either:
Collect the Sushiswap rewards on Solana, bridge them to Ethereum using sollet.io, and then send them to the Ethereum xSUSHI pool;
Use the rewards to buy SUSHI on Raydium and then send that SUSHI over to xSUSHI on Ethereum;
Use the rewards to buy and burn SUSHI on Raydium
Each of these could be live at launch and would flow rewards back to all SUSHI holders.
EcoSerum grant and cooperation
If the SushiSwap community and Raydium successfully come together to build out support for SushiSwap on Serum, the community would be eligible to receive a generous grant from EcoSerum, a Serum node supporting the development of the ecosystem.
According to the grant, the following “rewards are for the Sushi community, controlled by governance, to do what they want with”:
50k SRM for points 1+2 in the grant
1 locked MegaSerum (MSRM) for points 1-5 in the grant (one MSRM = one million combined SRM)
In addition, 20k SRM for pts 1+2 and another 10k for pts 1-5 to the team who builds it
Being the recipient of the MegaSerum would allow the Sushi community to fully participate with Serum, run a node, receive yield, benefit from buy & burns, as well as reduced fees as below that would benefit trades for SushiSwap on Serum:
Maker fee from -0.03% to -0.05%
Taker fee from 0.22% to 0.1%
Ideation and project scope
Development of the protocol and iteration on testnet
Development of liquidity pools and staking completed
Website and platform launch
After a lot of hard work, Raydium successfully launched on February 21, and is now up and running at www.raydium.io. If you have a minute, take a look around and try out the site. We’re new here though, so go easy and try not to break anything!
Collaboration with Sushi to power pools and staking for Bonsai
Development of cross-chain swap
Explore options for further integration between SPL and ERC-20 wallets to streamline user transition
- Further collaboration with Sushi on additional features
Leverage of external oracles for improved market making
Governance model ideation for further ecosystem development
Raydium’s AMM has been running on Serum’s main net for several weeks already without issue followed by the launch of the platform on February 21st. The Bonsai implementation could be done quickly through a straightforward integration of SushiSwap’s frontend with our JS wrappers. Then we would work together to do some serious testing, and ensure the platform performs as expected in all scenarios.
We anticipate that we could go live with Bonsai, or testnet at least, within Q1 of 2021.
The purpose of this proposal is to lay out an efficient and effective method for SushiSwap to evolve and build out its leading platform on Solana and Serum. Here at Raydium we are excited for the chance to work alongside the community to make this all happen. We hope you’ll consider this proposal and are open to any suggestions or feedback to ensure our communities have the best plan moving forward.
- Lets build it!