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Last updated: Nov 23, 2022
Impermax is an automated crypto lending platform for users of decentralized exchanges, through which liquidity providers can lend funds to other providers to use for earning AMM yields and share the returns with lenders. All impermanent loss is carried by the borrowers which make the indirect liquidity provider free to yield farm with no such risk. By depositing supported LP tokens on the app, users can earn passive returns, and withdraw them at any time.
In order to participate in borrowing on the platform, users need to register and deposit their LP tokens as collateral. Once borrowed, LP tokens can be used in different AMM platforms to generate profit.
The Impermax lending market consists of two main innovations. The first one is keeping all lending pair pools separate, which means that if a borrower’s position is liquidated in one pair, the other pairs will not be affected. The second main feature around which the protocol is built is the collateralization model. Impermax uses a parameter called “safety margin” to reduce required over-collateralization, thus providing higher leverage than similar current designs.
Since the app was first intended to interact with Uniswap the most, the architecture of the protocol is heavily influenced by Uniswap, as mentioned by the team in their whitepaper. The smart contracts fueling the platform are divided into core and periphery.
The core contains all of the main logic of the application, such as the state data, and the users’ funds. Most of the parameters are non-upgradable, besides some, such as transaction fees which are adjustable by the governance.
This group is composed of contracts such as a Factory, a Price Oracle, and many Lending Pools, which can be created by anyone through the Factory, in a permissionless way. Each Lending pool is associated with a token pair and consists of three contracts. Referred to as “Borrowable0” and “Borrowable1”, the first two smart contracts are used for lenders to deposit tokens. In exchange for depositing in pools, users are given interest-bearing tokens which are exchangeable for the original ones at any time as long as there is enough liquidity in the pool. The third smart contract called “Collateral” is used for borrowers to deposit LP tokens into to create a loan. Since all Lending Pools are isolated, the collateral can only be used to borrow tokens deposited in the pool of choice.
The periphery consists of all the contracts needed for users to interact with the core. Through these contracts, consumers can deposit tokens, create loans, or leveraged positions on LP tokens.
Since the contracts of the periphery group do not store any data, users can jump from one contract to another seamlessly, and third parties can create new peripheral contracts to implement custom functionalities.
The Impermax Finance app requires users to have a Web3 cryptocurrency wallet and some ETH to pay for transaction fees, as well as Uniswap LP tokens - for borrowers. LP tokens can be deposited after connecting a wallet with the Impermax Finance app and choosing the desired token pair, borrowers need to make sure the borrowing LP tab is selected. Once the user clicks the “Deposit” button, all deposit-related information appears, and an interactive slider can be used to choose the amount of LP tokens to be deposited before approving the transaction.
To leverage LP tokens, users need to click on the “Leverage” button, and once again use an interactive slider to pick the amount of leverage they want. After that, the transaction needs to be approved and signed from the user’s wallet.
To borrow tokens using LP tokens as collateral, users need to navigate to the token pair they want to borrow against and click on the “Borrow” button. After confirming the information presented and using another interactive slider to choose the amount to be borrowed, the user needs to approve and sign the transaction from their wallet. The interest rate is shown before approval. Borrowed funds can be repaid by clicking on the “Repay” button and following the instructions.
The only supported wallet Impermax Finance lists currently is MetaMask.
Out of the 100,000,000 IMX total supply, 14M tokens were given as an airdrop to top Uniswap liquidity providers. 1M IMX was allocated to provide early liquidity on Uniswap. 40M IMX was allocated to the Treasury or IMX’s liquidity mining program, intended to run for four years after token launch. 10M IMX tokens were sold in a private sale at a price of $0.05 to fund the early development and liquidity of the project. 20M IMX tokens are set aside for future growth of the platform and are set to unlock slowly over four years. This fund is intended to be used for “hiring more developers and expanding the protocol to all major AMM platforms”. 12M IMX was given to the founding team and “other critical team members”, also set to unlock over four years. 3M tokens are reserved for rewards for advisors, partners, and the community.
All funds generated from transfers, or the flat 0.1% borrowing fee on some blockchains which was removed in v2, are split between lenders – 80% and Impermax – 20%. IMX tokens can be used for voting on development proposals and funding as well as other financial decisions, management, and governance rules, controlling profit distribution, changing the interest curve which determines the interest rates charged to borrowers and earned by lenders, and for adjusting the percentage of profit from each interest paid by borrowers on the platform.
IMX tokens can be staked on the platform in exchange for xIMX which is a fully composable ERC20 token representing the user’s share of the staking pool.
Following the recent Impermax hack, the team behind the project came up with a recovery plan including a token swap based on a snapshot taken before the incident happened. A new token is to be created to replace IMX and it will be distributed to previous IMX holders. The snapshot includes everyone holding IMX in any possible way at the time it was taken, according to a Post-Mortem released on the Impermax blog page. The list of eligible IMX token holders for the new IMX token includes LPs, lenders, stakers, and every other type of IMX holder.
Although further details of the upcoming token swap have not been defined yet, the team sees the event as an opportunity to improve previous flaws in the tokenomics, such as ticker name (which is often confused with the IMX token of ImmutableX), cross-chain compatibility, farming rewards distribution, and others. There is an ongoing discussion between the Impermax Finance team and the project’s community on Discord regarding the token swap, with everyone invited to share ideas and suggestions.
The creator of the Impermax team is Simone Rigolon has worked on numerous blockchain and open-source projects and has seven years of experience as a developer on multiple platforms. Finance and Operations are run by Brian Tinsman, who has 18 years of game development experience and five years of experience in tokenomics, analysis, and token ecosystem design. The advisors of the project are Kyle Chasse, Dr. Deeban Ratneswaran, and Marco Calicchia. Impermax Finance audits can be found in the protocol dashboard on this webpage.
On July 16, 2022, a hacker was able to steal roughly 9 million IMX tokens from wallets controlled by the Impermax team. The attack was immediately noticed and the team did their best to transfer assets out of the affected wallets, according to a post-mortem released after the incident. Since the team knew if the hacker was to sell all stolen tokens that would crash the price of IMX, and since draining liquidity would make liquidity providers face a great loss, the team decided to frontrun the hacker and dump a large number of tokens in the market first. This allowed Impermax to secure a part of the LPs funds which were to be refunded to them in the weeks following the incident.
Besides partnering with Uniswap to launch the initial version of the protocol which was heavily focused on facilitating Uniswap users’ needs, the company has also teamed up with Mogul Productions – “decentralized film financing (DeFiFi) and movie-based non-fungible token platform”.
Impermax also partners with Quickswap on bringing the Impermax platform to the Polygon network. The platform also integrates Chainlink Keepers to automate staking reward distributions. Earlier this year, the company announced they are bringing their product to Arbitrum where it is available through SushiSwap’s SLP which can be used as collateral on the platform. There is also a cooperation with Swapr on Arbitrum, integrating Swapr pairs with the Impermax protocol. The Avalanche integration provides leveraged yield farming and IMX incentives for pairs Pangolin. Yield farmers on Moonriver can use their Solarbeam LPs as collateral on Imperamax and leverage their LP positions.
The IMX token is available for trading on SushiSwap, Uniswap (v2), MEXC Global, BKEX, and CoinEx.
Currently, the company is working on integrating more blockchains and supporting more NFT-based AMM models. The team is also trying to implement more decentralized governance, and develop more staking programs. UI improvements, investment tracking as well as improved user onboarding are part of the goals set for the end of Phase 2 of the published roadmap. During Phase 3, the project will focus mostly on supporting more L2 platforms which are currently being researched. In the future, Impermax finance aims to become the top financial services platform for liquidity providers and release a suite of decentralized financial services for LPs on the next generation of AMMs.
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