Amulet V2 Whitepaper
Table of Contents
Executive Summary
Amulet is a Web3 discovery platform that combines yield opportunities with risk management strategies, termed RiskFi.
The protocol employs a Risk Adjusted Yield perspective to allow users to self-administer balanced strategies accounting for both yield and risk, transparent risk profiles, built-in loss protection, and efficient parametric claim handling.
The native $AMU token allows for governance participation, business incentives to encourage activity, and other utilities, with a multi-chain governance mechanism including a gauge system to distribute rewards to active participants in a fair manner.
Amulet offers a Loyalty Program to incentivize user engagement across the board. Actions on the platform allow users to earn loyalty points, which can be redeemed for various rewards and privileges.
Overall, Amulet sets itself apart by offering a user-centric experience that combines yield opportunities with robust risk mitigation strategies and reinforces peace of mind for everyone involved in the Web3 space.
Introduction
Lessons from Amulet V1
Amulet V1 served as an instructive live experiment in the Web3 ecosystem, revealing key insights about user behavior and market needs. These observations have provided invaluable insights into Web3 and constituents' behaviours.
a. Desire for Yield Over Asset Protection
Despite users knowing they face significant risk whilst chasing the latest yield-generating trend, they continue anyway. We believe this happens because there is the asymmetric reward for doing so and there is too much friction for the average user to know how to hedge inherent risks.
b. Risk Sellers Need Clear Risk Coverage
When users buy coverage for their activities, they make a dangerous assumption that anything that goes wrong is covered. Traditional risk transfer models are unable to cover this broad range of scenarios without serious recourse.
c. Risk Underwriters Need Clear Value
Risk underwriters find it difficult to accept a risk without understanding its scope, how much they will be rewarded, and the duration of their commitment.
d. Individual Protocols Unlikely to Plug-in External API
Unless it is critical functionality, it is unreasonable to assume (despite strong logic), that another protocol will implement coverage directly in their UI. Chief of all the potential reasons is that user demand for coverage is not strong enough to overpower the increased friction in user experience.
e. dApp Toggling is High-Friction
Most users do not want to think about the worst-case scenario and protecting against their risks. This problem is compounded when they need to navigate an entirely new platform to purchase coverage.
RiskFi - Inception of Amulet V2
Informed by the key observations from Amulet V1, Amulet aims to directly address the pressing issues plaguing the Web3 space. Rather than being a mere upgrade, Amulet is a transformative step that offers a clearly articulated value proposition to meet both the risk and yield aspirations of Web3 users.
This idea is all about combining the best of both worlds: navigating Web3 safely.
a. Balancing Rewards and Risk
Not all Web3 opportunities are created equally. Think of us as your gourmet chef, handpicking the best ingredients from the market to craft a top-notch meal. We sift through countless Web3 projects and handpick ingredients that meet our stringent criteria, allowing you to put your product together.
Each opportunity (to earn rewards from providing liquidity to third party protocols) will be evaluated based on:
Expected rewards under a normal operating environment - Ranging from stable and low rewards like money market equivalents to aggressive leveraged yield-farming strategies.
Sustainability of the reward stream - Including protocol security, blockchain sustainability, and strength of the payout token.
Most importantly, Amulet gives users the chance to find yield on the latest and hottest chain, without compromising on the risk that they’re willing to take.
No one likes nasty surprises, especially when funds are involved. With Amulet V2, you'll always know what you're getting into. For every yield opportunity we showcase, we provide a clear risk profile – a straightforward breakdown of potential rewards and associated risks. It’s like reading the nutrition label on your food but for your yield strategies.
This process helps users balance prospective rewards against the risk of loss (e.g. technological, economic, etc.) to narrow the universe of potential yield options into an actionable universe, so that they can make better-informed decisions when deciding how to allocate their own funds.
We believe users want to be educated on the risks that they’re accepting. A convenient and easy-to-understand process forces awareness amongst the general public.
b. Scalable Risk Model
Users, digital asset holders and builders all profess a need for insurance, but do not know how to implement it. The need is high on new L1s and L2 scaling solutions, but deploying an entire protocol onto these blockchains is time-consuming and intensive. A light-weight solution is required.
Built-in loss "risk vaults" are the key innovation which allow users to hedge risks while achieving a steady source of rewards. Risk vaults sit side-by-side alongside yield vaults, allowing users to automatically allocate a small portion of their earned rewards to pay premiums for loss protection.
If things go south in a Web3 project, we have mechanisms in place to mitigate the damage, ensuring that a bad day doesn’t turn into a financial nightmare.
Each yield opportunity will transparently list exposed risks as well as risks that will be hedged via risk tools.
c. Parametric Claims
Users hate any source of ambiguity in the claims process. This often comes up when terms and conditions that require human opinions are used after a loss event. Parametric models promote trustless characteristics that are part of the fabric of Web3.
We've adopted a technique inspired by parametric insurance, which uses objective metrics to decide when a claim should be triggered. In simpler terms, it's a way to ensure claims get handled efficiently, reducing overhead and speeding up processes. Imagine an automatic system that instantly knows when to offer you an umbrella because it started to rain.
Rather than focusing on the subjective nature of smart contract exploits, which can be perpetrated internally, involving Web2 or Web3 vectors, parametric examination of an LP position gives us the deterministic trigger.
Platform Design
Platform Overview
Amulet is a one-stop platform for both yield generation (through third party protocols) risk management, with integrations on the yield sources and risk management mechanics.
Core Components
At a high level, the core design for the above components is listed in the table below.
Yield Vault
• Stake Assets: Users deposit their assets into the Yield Vault.
• Automated Strategy Allocation: Depending on user's selection, the Yield Vault provides a technical tool which enables users to automatically stake these assets into various in Yield strategies and mints LP tokens.
• Protection Purchase: System periodically utilises generated rewards to buy / renew covers for the Yield Vault from the Risk Vault.
• Parametric Cover Checks: System routinely checks if parametric cover conditions are met. If so, claims are made from the Risk Vault.
Risk Vault
Single Vault
• Stake funds into the single vault.
• Receive protection fees.
• Withdraw from single Vault.
Common Vault (for Amulet Protocol)
• Reserved $AMU token as Amulet Safety Fund.
• Each yield vault is assigned with a specific percentage of the common vault fund.
• Receive protection fees.
Risk Transfer (for other protection providers)
• Integrate with Amulet Protocol.
• Receive protection fees.
Capacity Calculation
• Total capacity of Risk Vault calculated from staked capacity LP tokens and leverage set by risk sharing parties.
Protection Fees Distribution
• Payments shared among single vault, common vault, and other providers based on staked capacity and predefined leverage.
Farming
Farming for Yield Boost: Users can stake the received LP tokens into Farming pools to harvest more rewards.
Claims
Parametric Protection Checks: System routinely checks if parametric cover conditions are met. If so, claims are made from Risk Vault.
Platform
Incentives
When users are holding veAMU, staking in the platform, or bringing in new participants, they stand a chance to benefit from the protocol and obtain extra yield.
Governance
The veAMU model is designed to create the desired alignment between protocol sustainability and token holder interests.
Loyalty Program
• Comprehensive Loyalty Program designed to reward users at every step of their journey.
• A multifaceted earning structure unlocks the potential to earn exclusive rewards, discounts, and VIP experiences.
Tokenomics
Governance
The native cryptographically-secure fungible protocol token of Amulet V2 (ticker symbol $AMU) is a transferable representation of attributed governance and utility functions specified in the protocol/code of Amulet V2, and which is designed to be used solely as an interoperable utility token thereon.
$AMU is a functional multi-utility token which will be used as the economic incentives which will be distributed to encourage users to exert efforts towards contribution and participation in the ecosystem on Amulet V2, thereby creating a mutually beneficial system where every participant is fairly compensated for its efforts. $AMU is an integral and indispensable part of Amulet V2, because without $AMU, there would be no incentive for users to expend resources to participate in activities or provide services for the benefit of the entire ecosystem on Amulet V2. Given that additional $AMU will be awarded to a user based only on its actual usage, activity and efforts made on Amulet V2 and/or proportionate to the frequency and volume of transactions, users of Amulet V2 and/or holders of $AMU which did not actively participate will not receive any $AMU incentives.
$AMU does not in any way represent any shareholding, ownership, participation, right, title, or interest in the Company, the Distributor, their respective affiliates, or any other company, enterprise or undertaking, nor will $AMU entitle token holders to any promise of fees, dividends, revenue, profits or investment returns, and are not intended to constitute securities in the British Virgin Islands, Singapore or any relevant jurisdiction. $AMU may only be utilised on Amulet V2, and ownership of the same carries no rights, express or implied, other than the right to use $AMU as a means to enable usage of and interaction within Amulet V2. The secondary market pricing of $AMU is not dependent on the effort of the Amulet V2 team, and there is no token functionality or scheme designed to control or manipulate such secondary pricing.
$AMU primarily gives $AMU token holders the right to vote and participate through governance in the protocol's development and other initiatives such as treasury utilization and rewards distribution, new product features, treasury allocations, determining future protocol objectives, etc. For the avoidance of doubt, the community does not have legal control over any matters relating to the Company (or any of its affiliates) or any of its assets, or any of its affiliated companies (including without limitation the selection of governing board of the relevant company, over corporate matters, development direction, specific projects, or deployment of that company's assets, which shall be the final responsibility of the governing board of the relevant company).
Reward Mechanism
Given the nature of Amulet V2's business, several features have been adopted from leading Web3 protocols in designing $AMU to enable robust governance and attract long term supporters of the protocol. Long-term holders will be able to enjoy certain features and benefits such as:
Users which stake $AMU to participate in governance would receive $AMU rewards for their participation
To promote usage of the platform and provision of liquidity, vault users would receive $AMU rewards for participation
By locking $AMU through the veAMU and gauge system (to participate, vote on reward levels, and contribute to the system) they may receive boosted rewards
As an access token, $AMU grants eligibility for Amulet V2's membership and loyalty program for exclusive rewards and priority access to new features and products or events and campaigns
To promote protocol adoption, $AMU is distributed for the community and partnership incentives
Distribution Schedule
The initial total supply of $AMU is set to 1,000,000,000. The majority of $AMU's supply (60%) is reserved for business incentives and ecosystem growth, whereas the rest are for fundraising, liquidity bootstrapping, and team incentives. The distribution details are set out below:
Seed Round
12%
10% unlock upon token generation event (TGE), 6-month cliff then linear vesting per block over 3 years.
Private Round
8%
10% unlock upon token generation event (TGE), 6-month cliff then linear vesting per block over 3 years.
Team & Advisors
15%
5% unlock upon TGE, 6-month cliff then linear vesting per block over 3 years.
IDO and Initial Liquidity Provision
5%
Depending on the IDO platform and exchange listing schedules.
DAO Reserves
15%
Reserved for liquidity provision on exchange listing, strategic partnerships, marketing and long-term development of the platform.
Protocol Risk Fund (Amulet Safety Fund)
20%
Locked up to bootstrap the risk vaults.
Business and Community Incentives
25%
Used for business development incentives such as liquidity mining, loyalty programs, staking rewards, community airdrops, etc.
Roadmap
Conclusion
Amulet represents the evolution of Web3 solutions, combining yield opportunities with comprehensive risk management. By prioritizing user protection and clarity, we aim to redefine the balance between risk and yield. As the future of Web3 unfolds, Amulet stands committed to delivering a trusted, user-centric platform for all participants.
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