You asked, we delivered 🧑‍🌾 Flywheel has a complete explainer how

BAMM works (in plain English) 🥸

Please share for awareness 🙏 https://x.com/flywheeldefi/status/1730361602640347314?s=12

Does it only apply to frax native LP?

LLAMA🤔

Стикер

What is the difference between BAMM soft clearing and curve soft clearing?

Maybe “soft liquidation” is not the ideal term for it as it would be confused for the LLAMA mechanism. The BAMM mechanism liquidates the position by simply adding it back into the reserve of the spot AMM. It’s a different concept entirely since there is no situation in which bad debt can occur, even if the price of the collateral asset goes to 0 rapidly. The unique insight is that debt is not actually denominated in the borrowed asset (FRAX) but instead is calculated as xy=k. Think of it like borrowing LP tokens instead of borrowing FRAX. If you borrow a frxETH-FRAX LP token, you always know exactly how much you owe because your debt is literally the equation xy=k, no oracles needed.

This one ^

understood a little, not everything, but eagerly waiting for your twitter thread on bamm..

I’ve heard cryptovestor talking about bamm as a way for the protocol to have a reserve to draw from to defend peg, generate profits, etc. is this true?

Ya it’s definitely one possible way for the protocol to hedge and create a delta neutral position through the BAMM.

Omg I think I see how this works now!! Holy sh**!! That is a genius move! So xy=k becomes the mechanism to ensure no liquidation happen. The lp is always balanced.

1) As a lender, what is my collateral? Is it a frxeth or is it an LP? (if I want to borrow frax against frxeth) 2) Do lenders get both trading fees and borrowing fees? 3) Would it be possible to have the debt as an LP? 4) What will be the available LPs on BAMM? (stable LPs eg frax-usdc, weth-frxeth?)

we are waiting for more details from Sam (TW or X)

If someone borrow FRAX against sfrxETH, is the collateral placed on the AMM curve with respect to the loan asset? And where does the loan asset come from? If the loan asset is from AMM pool, won’t this affect the price of that trading pair?

also interested in this as I understand: the collateral is places in the amm and the lender will hold an LP loan asset is removed from the lp rather than swapped, so there is no price impact. but that's only my assumption

brainlets

So is this just same as what GammaSwap / Smilee / GoodEntry are doing to allow users to borrow LP tokens to long gamma? What will be the differences?

Welcome onboard, ser. Big fan

i think he's been around for sometime now

"Let's say you put 1 sfrxETH in the BAMM & take out a loan of 250 FRAX. When this happens, the LP pool is filled with more ETH & FRAX is taken out" I guess that immediately after this borrow takes place, another actor arbs this right? or the BAMM itself does so? Since on the LP, now frxEth is cheaper than Eth or frxEth on another pool, it should happen immediately and the pool will go back to the nominal balances at t0 before the borrowing actual happens. "Before bad debt can ever be accrued, BAMM sells sfrxETH at a discount" What are the exact triggers/parameters for this?

Is collateral also denominated in LP tokens?

Debt is, but not collateral, it’s the token you use for your loan just like Aave, Compound, or Fraxlend.

So lets say I'm short ETH and my health factor is close to 1. I don't see how a big ETH buy wouldn't make my "lp token debt" worth more than my stable collateral?

When you say you are short ETH are you saying your collateral is FRAX in a FRAX-ETH BAMM pair?

Yeah, for example