Poolshark is a decentralized exchange where users can create directional positions to profit from volatility. Its developing company, Poolshark Labs, was founded in 2021 by alphaKΞY, while the Poolshark platform was released in December 2023. Poolshark is powered by the FIN token. Poolshark aims to solve the problem of impermanent losses from providing liquidity on a decentralized exchange.^[1]

History

Poolshark Labs was founded in 2021 where they worked to push out Poolshark Protocol, a collection of non-upgradeable smart contracts that together create a protocol that facilitates trading of ERC-20 assets on Ethereum and other blockchains.^[2]

Its noncustodial smart contracts act as a decentralized exchange offering both directional and bidirectional liquidity. Each type of position is placed within a liquidity pool and transacted via swapping. Having multiple liquidity pool types allows Poolshark to function as a hybrid of an automated market maker (AMM) and a limit order book (LOB) at once. The key difference between Poolshark and limit order books is that LOBs have an order queue while Poolshark merges all liquidity into a single pool, allowing for higher transactions. FIN is the native token of Poolshark that rewards users for providing liquidity, utilizing the platform, and DAO governance.^[2]

Overview

Poolshark is a protocol functioning as an automated market maker (AMM) that incorporates both directional and bidirectional liquidity. In the context of directional liquidity, individuals depositing into the pool can establish liquidity positions exclusively for selling.^[3]

Protocol Concepts

Range

Users expect concentrated liquidity automated market makers to provide range. Liquidity providers select a price range for their liquidity to trade over, resulting in increased capital efficiency and reduced slippage for swappers. Users have to choose a Range Bound, such as a Full Range, from 0 to infinity, so the price will always be within the range for collecting fees. The variables that change the width of the liquid range are the depth of the liquidity and the effects of impermanent loss.^[4]

Accrued Range Pools utilize the value feeGrowthGlobal to monitor the extent to which users' positions have been filled. The withdrawal of liquidity from the pool is determined based on the current tick's position. Fee tracking involves the values feeGrowthGlobal0 and feeGrowthGlobal1, situated on the upper and lower ticks, respectively, representing the users' positions. The global fees generated signify one unit of liquidity. To ascertain the fees associated with a particular position, the protocol multiplies the liquidity amount of that position by the global fees. Fees accumulated beyond a specified price range are recorded when a tick is crossed. This enables the protocol to compute fees earned below the lower tick and fees calculated above the upper tick. Both feeGrowthGlobal0 and feeGrowthGlobal1 are on a per-liquidity-unit basis, so the value is multiplied by the liquidity amount within a position to determine the fees owed to that specific position.^[4]

Limit

With Poolshark, users have access to Limit Swaps, a new method of on-chain trading that combines the power of token swapping with liquidity.^[5]

Limit Pools

Limit Positions operate similarly to a limit order but are consolidated within an invariant curve. This mechanism is employed to gather liquidity for a specified pair. Limit Pools allow users to undercut current market prices and receive prioritized execution, for example, offloading a large position before a significant market move. Users can operate Limit Pools by effectively undercutting the market price and filling the order.^[5]

Limit Orders

Directional liquidity allows for one-way fills, akin to the traditional limit order system. The Poolshark team is excited to see how new utilities are formed around each type of custom position. With these new position types, liquidity providers can customize their risk profiles by placing directional bets on the market.^[5]

Cover

Cover Pools

Cover Pools allows users to create a position to increase exposure to a specific token on a conditional price for a token pair. If the ETH price increases, the pool sells DAI and increases the ETH exposure If the ETH price decreases, the pool sells ETH and increases the DAI exposure.

In contrast, if the position had been in a bidirectional AMM, it would increase the exposure of the token dropping in price in comparison to the opposing token. If the market wants ETH, the pool takes DAI and raises the ETH to DAI price If the market wants DAI, the pool takes ETH and decreases the ETH to DAI price. This creates a hedging tool for the user if they want to enter or exit an ERC-20 token over some range.^[6]

FIN Token

FIN's maximum supply is 20,000,000 tokens.^[7]

Distribution​

Token Supply Distribution:^[7]

• 70% Community
  • 45% Options liquidity mining
  • 25% Ecosystem fund
    • 10% POL bonding
    • 5% Initial Liquidity
• 20% Team
  • 18% team
    • 5-year linear vesting; no cliff
  • 2% advisors
    • 3-year linear vesting; no cliff
• 10% Investors
  • 3-year linear vesting; no cliff

Staking

Users who stake the FIN token will be returned with a liquid version of FIN called sFIN, which represents their share of the staking pool.^[8]

sFIN​

sFIN is the receipt token for FIN users, which represents the share within the Poolshark Protocol. These users will then get rewarded 100% of the trading fees on all pairs, and they will be rewarded with FIN tokens on a multiplicative basis. Users can be rewarded with rFIN and multiplier points for even more rewards and a share of the protocol revenue. sFIN will also be utilized for governance proposals.^[8]

rFIN

rFIN is a reward token for sFIN stakers. They can stake rFIN for further token emissions and platform fees, or they can be vested over 12 months to receive FIN tokens. Each rFIN will earn the same amount of rewards as the FIN token.^[8]

oFIN​

oFIN is an ERC-20 token rewarded for providing liquidity to the protocol. When a user redeems this token they will be able to acquire FIN token at a discounted price to market (% discount subject to change via DAO governance). oFIN + WETH is directly convertible to FIN with no expiry date.^[8]