Catalog AMA — April 2022
Hello everyone! We are working pedal to the metal to bring the product out very soon. Let’s use this time before the launch to understand more about the product. As part of this initiative, we asked our community members in Discord to share their questions. We answer the top 10 upvoted questions in this blog.
What is the fee structure for swaps executed on Catalog’s native pools? How does it benefit Darknode Operators and CAT holders? (Ex a BTC<->ETH swap)
Catalog charges 0.3% fee on all trades. The fee is built into the price calculation.
To explain how fees are utilised in the system, we need to introduce an important actor in the Catalog system, the Liquidity Manager (LM). LM manages the native liquidity pools and is also responsible for paying interest (yield) for the Catalog account holders. LM also takes the IL risk for the liquidity pools. So, all the fees generated goes to the liquidity manager. Then, the LM uses part of the fees to pay off IL dues and the rest to pay yield to the liquidity providers. The LPs are basically all the Catalog account holders. For V1, Catalog itself will act as the LM. We intend to decentralise this role in the future.
Impact on DNOs:
At this point DNs will not be earning a part of fees directly. The Ren team is working on the fee model for applications like Catalog. There are three models Ren is looking into namely: a fixed fee per year paid in CAT/REN, a per use fee paid in CAT/REN and a TVL based fee (which would be a percentage of the total amount locked per year). This decision will be made by the Ren Community and DNOs, and will come into effect 60 days after the decision is officially announced. As part of Catalog launch initiative, DNs will be airdropped a fixed number of CAT tokens during every epoch, until the official fee model kicks in.
Impact on $CAT Holders:
In a later update, LMs have to stake $CAT tokens to gain that position. So, $CAT token holders can stake their tokens with an LM and earn part of the profit they make and also take part of the IL risk.
What will be the total supply and utility of the $CAT token?
The $CAT token powers the Catalog ecosystem. It has a supply of 1 billion tokens. $CAT tokens have these characteristics on launch —
- They are emitted as rewards for depositing funds into your Catalog account.
- Users can multiply their yield percentage by staking $CAT tokens for a fixed period of time. The multiplier increases with staking more $CAT tokens or staking for a longer period.
- Users can get a discount on transfer fee by paying with $CAT tokens.
- Users can purchase premium .cat names using their $CAT tokens.
- New token listing requests require a fixed fee charged in $CAT.
We will introduce the following characteristics in Catalog V2 —
- $CAT token holders control the emission weights for various cross-chain pools. Token holders can choose and fund the assets they think would create the most amount of fees for the tokens emitted.
- Staked $CAT tokens can be used to participate in governance in the place of tokens that are provided as liquidity in Catalog. This is called meta governance, as people can participate in the governance of multiple projects by just holding $CAT tokens. For example, a $ROOK → $BTC pool can be created on Catalog, where the $ROOK on Catalog can be used to participate in KeeperDAO governance. The combined voting power of Catalog’s $ROOK liquidity is controlled by $CAT token holders.
We have other interesting ideas in the pipeline. One of the questions asked was regarding how the community plays a role in our ecosystem, we would love for the community to actively participate in adding new ways to use $CAT.
P.S: We will not be using CAT for governance until all the planned features of the product are launched.
What’s Catalog’s stablecoin approach?
- BTC/USD pool(s)
- Combining USDC across all chains into one USDC
- Direct integrations with Circle or Tether
- Stableswap pools (eg USDC_ERC20/USDC_SPL or USDC_all_chains/USDT_all_chains) vs. letting Curve deploy later
Great question! You are almost on point with stableswap pools. We are actually going a step beyond that to abstract all the stablecoins under a single USD ticker. Users can deposit any stablecoin of choice and get USD in their Catalog account. We charge a flat 0.05% fee for conversion between stablecoins during trading or withdrawals. The main intention behind this approach is to concentrate liquidity, which is what we are trying to maximise throughout the project. We are currently planning for this feature to be included in the V2 release.
Can you expand on Catalog and MEV?
It sounds like KeeperDAO could fill token swaps (ETH -> ERC20), but what about trades that originate on other chains, like trading ETH in my Ethereum wallet for something in Catalog? That lock-and-swap transaction is public. Even if I used Flashbots, I suppose that trade could still be sandwiched if another trader were to submit a Catalog order from their metaversal account x% of a block before my Ethereum transaction finalizes (may be too much daylight to pull off, but you can’t really force people to use Flashbots anyway). Would the team consider encrypting transaction inputs by default in the future? Seems like that could complement KeeperDAO in MEV-protecting Catalog by default on all chains, for all transaction types and hops, and be another material differentiator from other cross-chain AMMs.
Yes, we have been considering encrypting transactions at the Ren level before the order within a block is finalised, to prevent external actors from being able to take advantage of these MEV opportunities. This is an area under active research, however we are planning on working with KeeperDAO for MEV protection on external chains
Will Catalog support burn-and-swaps?
For example, the ability to swap BTC for SOL not only by sending native BTC or starting with it in your account but also by burning renBTC from any host chain.
Catalog will allow users to deposit Ren wrapped assets directly into their accounts. Once deposited, they can be traded for any other asset within the system.
Does Catalog run completely on Ren Mainnet?
Did I get this right: once Ren launched its full Layer1, Catalog will run 100% on the Ren Mainnet and 100% of the transaction volume of catalog will go though renVM? Or are there any scenarios where Catalog generates transaction volume that does not go through ren and where the ren darknodes do not profit from?
Yes, all Catalog transactions happen on RenVM. Some transactions might also trigger transactions on other chains, for example, during withdrawals and boundless liquidity transactions.
What are Catalog’s goals/objectives when it comes to competing in the AMM space?
What specific feature(s) make Catalog distinctive/superior to current market-leading AMMs?
Another great question! Catalog’s goal is to make interaction with DeFi and blockchain very simple and straightforward for users.
There are three features that are distinctive about Catalog with respect to the AMM:
- Users are protected from Impermanent Loss. IL is one of the biggest financial and UX challenges for AMMs. How we handle IL is explained above in Q1.
- Catalog can act as the AMM aggregator of the multichain. Jaz explains an example trade in his tweet. Catalog doesn’t try to reinvent the wheel again by creating liquidity pools that already exist. So, it utilises the power of native chain DEXes (DEX aggregation) to execute the native chain parts of the swap. With native liquidity sorted, Catalog places its focus on creating cross-chain liquidity pools with the power of RenVM. The combination of Catalog’s DEX aggregation and in-house cross-chain pools makes it possible for users to trade any asset across all supported chains.
- Liquidity provision is single-sided and also completely automated. It doesn’t require any actions from users — users earn LP rewards (yield) from the moment they deposit funds into the Catalog account.
Will Catalog support limit orders? If not initially, is it in the roadmap?
Yes, we believe limit orders would be a very important part of the puzzle.
How does a login to a metaversal account typically work?
What does it look like? What will users need to secure their account and its accessibility? (Seed phrase? Ledger compatible? etc..)
You create your metaversal or Catalog account by simply connecting your MetaMask wallet (or any other web3 wallet of your choice) to Catalog just like any other dApp. Catalog uses your private key from your Metamask address to secure your Catalog account. Once you have created your Catalog account, it automatically logs you in, as long as your Metamask is logged in.
What solution/mechanism will allow users to connect directly to a bank account?
We will initially be using third parties such as Banxa/Moonpay to enable fiat gateways into the system. We are researching further on improving this part of the system, and will evolve it as we find better solutions.
Art by wake_222#5563, one of the Vincent Van Goats of the Catalog Community
Thanks to the community for submitting and voting on these questions! We will also be answering some of the less upvoted yet interesting questions in our Discord server.