Brief Analysis of Asymetrix: LSD-based Asymmetric Income Distribution Protocol

Through a fair and transparent mechanism, Asymetrix centrally distributes the income of all stakers to a few lucky ones, so that they can obtain excess income, while other stakers only keep their capital and do not receive any income.

For individual investors with limited funds, the annualized rate of return brought by ETH pledge is generally only about 5%, which is difficult to stimulate their investment interest. They often dabble in the cryptocurrency market in search of higher rates of return. Asymetrix provides them with the opportunity to centrally distribute the income of all stakers to a few lucky ones through a fair and transparent mechanism, so that they can obtain excess returns, while other stakers only keep their capital and do not get any proceeds.

How the protocol works

1. The user deposits the pledged ETH (stETH) into the public pool supported by the smart contract. Once the user deposits to the Asymetrix protocol, the smart contract will mint PST (Pool Share Token) at a ratio of 1:1 and send it to User's wallet. PST tokens reflect the user's share in the protocol and are required for withdrawals. In the current version of the protocol, the minimum deposit amount is 0.1 stETH. However, deposits do not necessarily have to be multiples of 0.1 stETH (ie 0.11234 stETH is acceptable).
2. The public pool generates income every 24 hours; the income generated by the pool is randomly and asymmetrically distributed among pool participants on a regular basis (currently once a week) by the agreement;
3. All users will receive ASX token rewards as an initial distribution based on the proportion of users standing in the protocol's TVL.
4. In case of winning a lottery, the user is automatically rewarded in the form of PST (an amount equivalent to stETH), so the user's balance increases, which automatically increases the chances of further draws. Therefore, there is no need to claim rewards every time. It will do it automatically.

Calculation of winning probability

Since the protocol accrues yield over time, a fundamental metric is how long a user's stETH has been in the pool and how much yield it has generated for the protocol. Otherwise, crypto whales could enter the protocol with large deposits at the last minute, gaining huge odds and “stealing” proceeds from smaller users.

Therefore, the first indicator that affects the odds is the TWAB (Time Weighted Average Balance). This metric shows the user's contribution to the total revenue of the pool generated between draws. If the interval between the two lottery draws is one week, and a user stakes 100stETH in the pool for one week (that is, 100% of the time), then its TWAB value is 100. The TWAB value determines the number of lottery tickets in the user's hand. The total number of lottery tickets is rounded up to the TWAB value of all users in the pool/the minimum deposit. It is hashed to obtain a unique id. The protocol sends the random number of the requested goods to CHainlink VRF, and takes the modulus of the returned random number to ensure that it is within the range of the number of tickets. Once a random number that meets the requirements appears, it will be matched with the lottery list. , to select the winner.

Governance

The protocol adopts AXS tokens as governance tokens. By holding AXS tokens, users can participate in the governance process, where they can propose and vote on various parameters and strategies that affect the operation and performance of the protocol. For example, users can decide how many users will receive a share of the proceeds in the weekly sweepstakes, how the proceeds will be distributed among them, how the funds of the protocol will be managed and distributed, and what other features or improvements should be implemented in the protocol.

Token value capture

AXS token should be the governance token of the Asymetrix protocol and a tool to capture the growth value of the protocol. However, judging from the current documentation, the agreement does not have a clear business model or fee structure, nor does it charge any fees from the revenue generated by the agreement. This means that all profits from the protocol revenue distribution go to users who deposit stETH into the protocol, while AXS token holders will not receive any rewards or dividends from the protocol’s revenue. This also means that the AXS token has no strong demand or utility within the protocol, and its value depends entirely on speculation or governance participation.

Summarize

The protocol allows those who hold a small amount of ETH to join the exciting world of LSDfi, where they can enjoy high returns and randomness through an asymmetric reward distribution. The protocol is also easy to use, as users only need to deposit stETH into the smart contract and wait for the weekly draw. However, there is still much room for improvement in the tokenomics design of the protocol, as ASX tokens have no clear value proposition or incentives to align the interests of users, developers, and governance participants.