Ferro Protocol — a high liquidity StableSwap AMM protocol that aims to enable secure and efficient trading of pegged assets in an effort to strengthen the Cronos ecosystem.
How does the Ferro Protocol work?
The Ferro Stable Curve Pool offers a wide range of useful features, provides better inter-protocol connectivity in Cronos, creates a more efficient way to access stablecoins and other highly correlated assets with lower fees, less slippage, less fluctuating losses and greater pooling usage. Money market protocols can list their interest-bearing tokens in Ferro, while any stablecoins with lower liquidity, linked to other chains, can use a metapool, configured to increase liquidity.
Key features of the Ferro protocol:
| 1. | Exchange of supported tokens with low slippage and fees. |
| 2. | Provide liquidity in exchange for Liquidity Provider (LP) tokens and earn transaction fees proportionate to your contribution. |
Ferro runs on the Cronos blockchain, which supports two types of tokens. The first is native CRO tokens for gas transaction fees. The second is CRC-20 tokens for trading. CRC-20 is a token protocol, very similar to Ethereum ERC-20 in terms of compatibility. Both $FER and $xFER in the Ferro protocol are CRC-20 tokens.
Compared to other DEX, Ferro Protocol has some advantages:
- Lower fees - thanks to the use of gas and the traffic efficiency of the exchange/token exchange mechanism, compared to a regular DEXX.
- Low slippage - highly correlated assets reduce price divergence within the tokens of the same pool.
- Limited by the absence of permanent losses - highly correlated assets reduce the overall market exposure of pools.
- Greater use of pools. Highly correlated assets enable wider usage by providing an opportunity to capitalize on the deployment of pools in other DeFi protocols.
Users can exchange one token for another if both tokens are available in any of the pools within the protocol. You can also set up a token exchange by specifying the allowable slippage in %.
Economics of tokens
There are 2 types of tokens to fuel the entire Ferro ecosystem, each with different features, namely $FER and $xFER.
Users can convert $FER to $xFER at any time at the current exchange rate.
When users provide liquidity to Ferro Protocol, they receive a corresponding Liquidity Provider (LP) token as proof of their participation. These LP tokens can then be staked to receive the following issuance reward:
- 60% reward in the form of $FER token, available for immediate collection.
- 40% of rewards will be directly converted into $xFER at the current exchange rate and will be automatically sent to a 30-day lockable vault.
Users can also upgrade their vault settings to get higher rewards. There are no limits on the collected $FER token (i.e. 60% share). Users can convert it to $xFER, sell it directly or use it to provide liquidity back to the protocol.