♾️vDECO: the Omni-LP

Yields change, so can you.

An interesting approach to solving impermanent loss for liquidity providers (LPs) can be observed from the outcomes of the Solidly system using veSOLID. veSOLID functions similarly to an LP token because all LP swap fees on Solidly's AMM are distributed to veSOLID voters. As a result, LPs essentially exchange their swap fees for SOLID emissions, and veSOLID holders receive swap fees for LP tokens they vote for.

veSOLID can represent multiple LPs simultaneously, depending on the user's vote. This means that veSOLID can serve as a flexible, "omni" LP position, enabling users to switch between different LPs with ease and without the usual losses associated with moving between LPs.

However, there are still some issues with this approach. veSOLID holders are exposed to the long-term performance of veSOLID, which comes with a 4-year lock.

DECO aims to build upon the ideas inspired by Solidly's outcomes to achieve an omni-LP without IL risk. To accomplish this, DECO needed to satisfy four key requirements:

• vDECO must have a floor value: Implementing a token with a floor price caps downside risk, enabling users to assess the risk of purchasing voting power by comparing the market price and floor price of DECO.

• vDECO must be liquid: No lock time for vDECO and high liquidity for DECO. This is solved by replacing the 4-year lock with a 1-week unlocking period and implementing Token-owned Liquidity.

• vDECO must be capital efficient: The system must allow risk-free borrowing against the vTOKEN to achieve capital efficiency.

• vDECO should be an omni-LP for multiple AMMs: Contrary to veSOLID, which serves as an omni-LP solely for the Solidly AMM, vDECO aims to be an omni-LP for various AMMs and DeFi protocols though plugins. Thus supporting any AMM type and promoting more competitive liquidity provisions as technology advances.

DECO is designed to meet these requirements, providing a comprehensive solution for an omni-LP token without IL risk.