Impermax V2: one factory becomes unlimited factories
The long-awaited Impermax factory V2 is now ready and live on all chains. However, this new update covers much more than that! In this announcement we want to present the idea of Impermax’s future architecture and some exciting improvements, including:
- Customizable factory smart contracts for any and all pairs!
- More efficient, faster, and more flexible interest rates!
- Removal of initial borrow fees!
- Introduction of liquidation fees!
All these will add up to a much more powerful and flexible DeFi lend/borrow engine!
What is an Impermax factory?
The factory is the smart contract that is used to create new pairs on Impermax. It is extremely important because it contains all the core logic of the Impermax engine. The smart contracts containing the factory logic are what allows Impermax to remain permissionless and non-upgradeable. These are the main features that makes the protocol safe for the users: no one, not even the admin, can maliciously or by mistake introduce a bug or act maliciously against the smart contracts. For a more technical explanation about the factory, please check out Impermax whitepaper.
Moving to a multi-factory future
Initially, Impermax was designed to only need a single factory for each chain. That factory was then used to deploy all the pairs on its chain. However, next-gen AMMs such as Uniswap V3 are requiring updates to be made to the original Impermax factory, but due to the non-upgradability principle we cannot just upgrade the old contracts. The existence of multiple factories in the same chain will allow us to keep Impermax updated and introduce new features while not compromising the old pairs. Another benefit of having multiple factories is that it will create greater decentralization and growth for the Impermax ecosystem. For instance a unique factory could be deployed for or by a specific partner in order to meet specific requirements or split protocol fees in exchange of other benefits.
What’s featured in Impermax factory V2?
- Updated interest rate model: the newest factory will feature the most up to date interest rate model with KINK_RATE_MULTIPLIER set to 2 (the same model already successfully tested on Avalanche). The parameters of this model have proven to be optimal for finding the right interest rate based on market supply and demand.
- Removal of the borrow fee: the initial borrow fee paid on opening of a leveraged position has been removed to further incentivize leveraged yield farmers.
- Faster incentives correction: the speed at which the interest rate adjusts itself can now be set at an even faster level in order to find the right incentives when the market dynamics rapidly change.
- Liquidation fee: an additional protocol fee on liquidation can now be set individually for each pair. This is an additional revenue stream, which at the same time makes Impermax safer for lenders. Usually lenders are at risk during periods of high volatility which potentially lead to liquidation cascade events. Thanks to the liquidation fee, during these periods the protocol will now generate more revenues than usual. These additional revenues will compensate for the higher risk. Additionally, on higher risk pairs a higher liquidation fee can be set in order to decrease the risk for lenders.
This was a major update that required rebuilding the whole UI from the ground up (even if no functionality change is noticeable to the end user yet). As a consequence we had to hold up other updates, partnership and addition of new pairs for a few weeks.
Now the priority is to recover the lost work. We’ll restart reviving Impermax markets by releasing the regular updates such as addition of new pairs, AMMs, partnerships, analytic tools, and new incentives (Polygon LM 2.0).
Planning for the worst
When planning for the next few months, something we can’t ignore is the recent bearish price action of crypto markets. We can’t predict whether this is just a temporary phase or if it will be prolonged for several months, but in each case we should be prepared for the worst.
What is sure is that no matter where the market goes, we’ll still be here and we’ll keep building! We have a long list of new features and updates that we’re working on for the protocol, and we have long term goals. Right now the main focus is on simplifying the user experience and making Impermax easier and accessible to everyone.
Keep in mind that the bear market is usually that time where quality projects differentiate themselves from the copycats who are just looking for quick bucks during bull markets. Once this ends, we’ll be back stronger than ever!