This AMA session with Impermax Founder Simone Rigolon occurred on May 14th, 2021. The following is a transcription of the live from DeFi Pulse’s AMA Discord channel. To participate in future AMAs, please join our Discord and follow us on Twitter.
Chaz Schmidt: Hello and welcome @everyone ! Thank you for joining us today for an AMA with Simone Rigolon, Founder of Impermax.
Simone will be answering questions we’ve collected from you, the community, throughout the week. Special thanks to everyone who submitted questions for today’s AMA.
Thanks for joining us Simone. How are you today?
Simone Rigolon: Hi Chaz and DeFi Pulse community! It’s a pleasure to be here.
I’m very good, and you?
CS: I’m doing quite well. Thanks for asking.
To start things off, can you share a little about Impermax for the audience? What is Impermax?
Simone: Impermax is a decentralized lending protocol designed around LP tokens.
It allows borrowers to use LP tokens as collateral to take loans. This enables them to enter in leveraged positions on their LP tokens.
On the other hand lenders are able to “indirectly provide liquidity” to Automated Market Makers by supplying their tokens to the borrowers. Lenders are able indirectly earn from AMMs trading fees without any exposure to impermanent loss.
CS: Very cool. You touched on a point that piqued the community’s interest earlier this week on Twitter. Can you explain lndirect Liquidity Providing for those unfamiliar with the concept?
Simone: Let’s start from normal liquidity providing which means supplying tokens to an AMM. This can be a very profitable way to invest capital, but at the same time there is the risk of impermanent loss and there are some complexity that are going to get worse with time. Basicallly it is not ideal for the average user.
Indirect liquidity providing means that you can lend your tokens to liquidity providers. They will borrow them and use them to provide liquidity to AMMs and earn trading fees. In return you will get a percentage of the trading fees they earn. This is ideal for the average user because it can be a “set and forget thing”, there is no exposure to IL and it requires only a single token.
CS: Ahh. So for example with for the USDC/ETH LP token pool you could provide USDC and earn trading fees without exposure to impermanent loss?
Simone: Exactly 🙂
CS: Browsing through Impermax ahead of the AMA I noticed that LP token lending pools are isolated. What does this mean for Impermax users and what led to the decision to isolate the lending pools?
Simone: There are many reasons that lead to this decision but the main one is that we wanted to build a protocol that was as permissionless as possible. Keeping all lending pools separated means that anyone can create a new one because even a malicious pool wouldn’t be able to affect negatively all the other existing pools.
The main advantages of this choice are scalability, security and minimized governance.
CS: That makes sense. Isolating the pools also isolates risk, mitigating any chance of systematic failure from one bad pair.
Simone: Exactly, it’s an architecture very similar to the one used by Uniswap for pairs.
CS: So Uniswap pairs are supported by Impermax today and the community wants to know: What AMM LP tokens do you plan to support in the future?
Simone: The plan is to add support for more AMMs like Uniswap V3, SushiSwap, PancekeSwap and others. Ideally we would want to support as many LP tokens as possible. Luckily our choice of keeping all lending pairs isolated allow us to scale as much as we want since supporting a new LP tokens doesn’t have any drawback on the existing ones.
CS: I’m glad you brought up Uniswap V3 because I saw that on your roadmap the other day and wondered how that will work with V3’s new price curve NFT setup. Can you shed any light on that at this time? We will accept soon ™️ if necessary
Simone: I can’t give too many details on how exactly it will work because we’re still researching LP NFTs and the way they can be used as collateral. Some complicated math involved, so it’s hard to talk about that in an AMA. 😅
Personally I’m very excited about supporting LP NFTs on Impermax because Uniswap V3 is very capital efficient by itself, and with NFTs enabled to be used as collateral that’s going to improve even more!
CS: No worries! The audience can stay tuned for that one. We only have a few minutes left anyways.
Since we’re on the topic of the roadmap, what’s coming up on the roadmap that you’re excited about?
Or even a recent release since you mentioned LP NFTs.
Simone: Many things like new features for the existing app, support for Uniswap V3 support for layer 2 and other networks.
I bet users are going to be very happy once Impermax releases on lower fees networks, but personally the thing I’m most excited about is Uniswap V3 support, for the reasons I’ve just talked about. Capital efficiency is key for AMMs in the long term and both UniswapV3 and Impermax are solutions to improve it.
CS: When you put it like that, it’s easier to see why on your website, you describe Impermax as “The missing piece to the Automated Market Makers’ puzzle”
In your own words, how does Impermax complement AMMs and where do you see Impermax fitting into the puzzle?
We’ve reached 30 minutes. Do you have time to answer this and maybe one other question?
Simone: Wow time runs fast. Yes, I have have time.
CS: I know right? Awesome I wanted to touch on one other aspect of Impermax that our community was asking about.
Impermax introduced a liquidity mining program which rewards users with IMX tokens for borrowing on Impermax. What was the motivation behind incentivizing borrowing?
Simone: The main reason is to incentivize the protocol usage and attract more liquidity. Impermax needs a lot of liquidity in order for the incentives to really work as they should. Farming is always a good way to bootstrap a new protocol.
There are a few reasons why we incentivized only borrowing and not lending. The main one is because lenders are still indirectly rewarded since the borrowing demand is very high. Not giving the reward to lenders means that they don’t have to worry about claiming it and instead they are rewarded with an higher supply APR that will compound over time.
CS: Interesting. In other words, borrowers pursuing more liquidity mining rewards earn more trading fees for lenders.
I think that’s about all the time we have for today. Is there anything else you’d like to say?
Simone: Not really, I just want to thank you and DeFi Pulse for organizing this event. It was a pleasure to answer these questions.
CS: You’re welcome as always. Thank you for coming! I learned a thing or two and I’m sure the audience found it helpful.
And thank you all for coming to today’s AMA!
And make sure to follow us on Twitter to hear about future AMAs!
Disclosure: This post is part of our paid promotional DeFi Pulse Partner Program; We’ve partnered with Impermax to help educate and inform the community about its permissionless lending markets. As always, we’re committed to providing the entire community with quality, objective information, and any opinions we express are our own.