3xcalibur is a multidimensional Arbitrum protocol built by the 3six9 Innovatio, and currently has a live testnet on Arbitrum’s Goerli. Powered by good lore, the $XCAL token, and a capital efficient AMM infrastructure, it will introduce a new technologically-advanced puzzle piece into the layer 2 ecosystem.

3xcalibur’s tri-AMM architecture is made up of volatile asset pools, a stableswap, and lending/borrowing pools. It campaigns itself as a “permissionless, liquidationless, oracleless liquidity marketplace” ready to take the market by storm.

Solidly was the first iteration of the well-known ve(3,3) model, combining Curve Finance’s veToken mechanics and (3,3) game theory from Olympus DAO to create a new and unique DEX/AMM model.

Unfortunately, several holes existed in the design. Most of Solidly’s supply was distributed as rewards within its first two months, with peak emissions hit in just the first 8 weeks. While this was a good way to incentivize liquidity in the beginning, it quickly diluted holders and created a governance monopoly controlled by early participants (more specifically, early whales).

Solidly users were also able to “double vote”, or vote for one pool and qualify to receive its bribe, then switch their vote to another pool before the end of the epoch to receive its bribe also. Users who didn’t actually vote for certain pools in the end still received bribes, meaning protocols were paying for votes they weren’t always receiving!

3xcalibur proposes its own improved spinoff of the Solidly AMM alongside a diverse DeFi product stack. It will thrive on capital efficiency, and the protocol itself will have several facets like a general purpose DEX, stableswap, lending pools, NFTs, and so much more.

It amends emissions to ensure they slowly (yet still efficiently) incentivize liquidity providers and lockers, unlike Solidly’s faulty rapid emissions schedule. 3xcaliGovern will solve the double-voting issue, ensuring users can allocate votes only once per epoch. While it plans to improve existing versions of the Solidly model, it will build far beyond this with its credit market, stablecoin, and various insurance products in the pipeline.

3xcaliSwap is built on the Solidly codebase with improvements to features like emissions rate and gauge voting. Alongside the regular Swap is a “Multiswap” feature where users swap one asset for many different assets in a single transaction!

One prong of the tri-AMM will be classic x*y=k constant product pools for volatile assets (0.27% fee), while another prong will be the stableswap pools specialized for trading stable assets (0.0369% fee). 3xcaliSwap will also include a “Zap” and a “Multizap” allowing users to one-click “zap” into a single or multiple LP positions.

While the 0.27% fee may seem high from a trader’s perspective, 3xcalibur argues that aligning incentives with LPs generates deeper liquidity for traders and thus, lower slippage. Ultimately, the savings from this lower slippage should offset the higher fees traders have to pay, creating a better tradeoff than low fees and poor liquidity.

The third prong of the tri-AMM will be 3xcalibur’s credit market “3xcaliCredit”, hosting a borrowing and lending platform for fixed-maturity collateralized loans. The 3xcaliCredit money market uniquely uses no oracles or liquidators, and offers the permissionless creation of lending pools for any two ERC20 assets!

Every 3xcaliCredit pool has the following parameters:

• Collateral Token: What a lending pool accepts as collateral

• Asset Token: What a lending pool dispenses when collateral is deposited

• Minimum CDP: Minimum collateral value required to take out a loan

• APR: The fixed maturity rate borrowers pay/the yield lenders earn

• Maturity: The date of settlement; the last day for borrowers to repay their loan

Pool parameters are automatically adjusted by the protocol inversely with the amount of assets deposited by lenders. The more assets deposited by lenders, the lower the minimum collateral value and borrow rate fall (and vice versa). This third branch of the tri-AMM and its pools are powered by a different type of constant product formula.

It is important to make a distinction of the three components powering the credit market: lenders, borrowers, and liquidity providers.

Lenders deposit into the lending pools and earn yield paid by borrowers. Similarly, borrowers deposit assets to collateralize their fixed maturity loan and pay a borrow rate to the lenders of their pool. “Fixed maturity” refers to the fixed time window in which borrowers must repay their loan in order to retrieve their collateral. Settlement immediately follows once a pool reaches maturity, and borrowers who have not repaid their loans will no longer be able to retrieve their collateral.

Liquidity providers play a fundamental role in supplying the money market. Unlike lenders who only deposit the asset being lent from a pool, LPs deposit both assets at a ratio determined by each pool’s supply and demand (maintaining the constant product).

Liquidity providers create “backup” liquidity for borrowers and lenders alike, and are the primary market makers of 3xcaliCredit. Borrowers and lenders both pay their pool’s LPs a 1.25% annualized fee, and LPs earn from spreads that vary by volume. They can earn additional yield when more assets are being borrowed than supplied by lenders, since LP backup liquidity is then used to supply borrowers.

Settlement payouts prioritize lenders before LPs, and with the perspective that liquidity providers “insure” lender deposits, this makes sense. Should bad debt exist at the point of a pool’s maturity, lenders are first in line to redeem their Insurance tokens and claim “backup” assets provided by LPs. After lenders are repaid, remaining collateral from borrowers who defaulted on their loans is then distributed to LPs. Although they take on greater risk, LPs have ways to hedge as well.

3xcaliCredit participants can meaningfully customize their risk and return. Borrowers closest to the minimum CDP pay the highest borrow rate, or can deposit more collateral to reduce the rate. Lenders can sacrifice their insurance in exchange for higher APR, or they can retain their coverage if they fear mass defaults.

Beyond a borrowing a lending platform, 3xcaliCredit can perform as a composable credit DeFi base layer! Protocols can plug into 3xcaliCredit and build or improve all types of onchain products. 3xcaliCredit can power decentralized credit swaps, interest rate swaps, raising startup capital, zero coupon bonds, and much more.

Credit default swaps (CDS) are basically a form of coverage for lenders. Should a borrower default, lenders with a CDS are repaid their principal and any interest from whoever they purchased it from. Using 3xcaliSwap pools, the protocol can facilitate a CDS market for users to trade lenders’ Insurance tokens.

3xcaliCredit also inspires a tokenized interest rate derivatives market. Lenders can swap ERC20 Interest Tokens on a secondary market in order to hedge or speculate on future interest rates.

3xcaliCredit can even position itself to offer permissioned under-collateralized loans to institutions or other credited individuals. Potential also lies in being a debt financing tool for emerging protocols, where startups can take out an 3xcaliCredit loan using their native token as collateral. With this, new projects can avoid sacrificing portions of their token allocation in order to raise necessary capital.

The governance branch of the protocol is where users can lock $XCAL, vote, claim rewards, and where protocols can deposit bribes for both 3xcaliSwap and 3xcaliCredit pools. This makes 3xcaliCredit the first known credit market with pool bribes.

veXCAL holders decide how $XCAL emissions are distributed amongst 3xcalibur pools, so naturally protocols have an incentive to buy and lock $XCAL themselves, or bribe veXCAL holders to vote for their pools. Protocols may only deposit governance-approved assets as bribes, and can submit a whitelist request through 3xcaliGovern to add new assets.

Unr3kt is a product stack dedicated to “solving the problems of OpFi”. This includes impermanent loss protection, depeg insurance, and its own native stablecoin.

The “ILinsure” product aims to iterate on the existing attempts to protect liquidity providers from dreaded impermanent loss. ILinsure has little documentation so far, but ultimately will be a product for insuring LPs against impermanent loss. The team has also confirmed they have an early stage proof-of-concept built.

As of right now, the depeg insurance product is still in the research and development stage. It will compare to something like the Y2K Finance, but will likely be incorporating the future $XDOL stablecoin and 3xcaliCredit pools.

Currently, the protocol has no official partnerships it has announced given it is unlaunched. However, the 3xcaliCredit money market is a massive gateway for new project integrations, and the 3xcaliGrant program for potential partners is an efficient way to onboard new collaborations as well.

$XCAL Price: N/A

Market Capitalization: N/A

Circulating Supply (at launch): 21,000,000

Total Supply: 100,000,000

Learn more about token distribution here, vesting here, and finished public round here.

Only 1.7% of the total liquidity mining emissions to be distributed in the first 8 weeks. Weekly emissions decay is capped at 1%, but adjusts automatically to eventually reach 2%. This keeps a steady flow of rewards with a constant incentive to lock over time.

On top of this, 3xcalibur takes a new approach where both weekly decay and tail emissions are algorithmically adjusted every epoch based on the current amount of locked $XCAL as well as emissions history.

$XCAL can be locked from 1 week to 3.69 years, returning more veXCAL per $XCAL the longer the lock duration. Lockers collect protocol fees, emissions, and participate in governance. Fees collected come from 3xcaliSwap and 3xcaliCredit activity, and in the future Unr3kt products and the $XDOL stablecoin.

veXCAL balances are represented by “veNFTs” given to users. While it is non-fungible, users can still split their votes on 3xcaliGovern across different pools. Users can allocate votes only once per epoch, solving Solidly’s infamous double voting issue. If a user locks multiple times, then multiple veNFTs are created. However two veNFTs can be consolidated into one, where the new lock duration is the longest of the two.

3xcalibur will be a fantastic addition to Arbitrum and its broader DeFi ecosystem. Its robust tri-AMM infrastructure makes 3xcalibur an ideal hub for trading, stableswaps, and borrowing and lending all in one. A novel suite of DeFi technology with a composable liquidity framework is coming to Arbitrum, and none other than the Insurgents are leading this mighty initiative.

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Join the Galaxy Box

Follow 3xcalibur on Twitter

Join the 3xcalibur Discord

DISCLOSURE: I hold a small amount of $XCAL (<1% of my portfolio). I was not asked to write this article and have not been compensated in any way. The information provided in this article is solely for educational purposes and should not be considered as financial advice. The views expressed in this article are my own and do not necessarily reflect the official policy or position of any company or organization. Readers should always conduct their own research before making any financial decisions.

3xcalibur is a multidimensional Arbitrum protocol built by the 3six9 Innovatio, and currently has a live testnet on Arbitrum’s Goerli. Powered by good lore, the $XCAL token, and a capital efficient AMM infrastructure, it will introduce a new technologically-advanced puzzle piece into the layer 2 ecosystem.

3xcalibur’s tri-AMM architecture is made up of volatile asset pools, a stableswap, and lending/borrowing pools. It campaigns itself as a “permissionless, liquidationless, oracleless liquidity marketplace” ready to take the market by storm.

Solidly was the first iteration of the well-known ve(3,3) model, combining Curve Finance’s veToken mechanics and (3,3) game theory from Olympus DAO to create a new and unique DEX/AMM model.

Unfortunately, several holes existed in the design. Most of Solidly’s supply was distributed as rewards within its first two months, with peak emissions hit in just the first 8 weeks. While this was a good way to incentivize liquidity in the beginning, it quickly diluted holders and created a governance monopoly controlled by early participants (more specifically, early whales).

Solidly users were also able to “double vote”, or vote for one pool and qualify to receive its bribe, then switch their vote to another pool before the end of the epoch to receive its bribe also. Users who didn’t actually vote for certain pools in the end still received bribes, meaning protocols were paying for votes they weren’t always receiving!

3xcalibur proposes its own improved spinoff of the Solidly AMM alongside a diverse DeFi product stack. It will thrive on capital efficiency, and the protocol itself will have several facets like a general purpose DEX, stableswap, lending pools, NFTs, and so much more.

It amends emissions to ensure they slowly (yet still efficiently) incentivize liquidity providers and lockers, unlike Solidly’s faulty rapid emissions schedule. 3xcaliGovern will solve the double-voting issue, ensuring users can allocate votes only once per epoch. While it plans to improve existing versions of the Solidly model, it will build far beyond this with its credit market, stablecoin, and various insurance products in the pipeline.

3xcaliSwap is built on the Solidly codebase with improvements to features like emissions rate and gauge voting. Alongside the regular Swap is a “Multiswap” feature where users swap one asset for many different assets in a single transaction!

One prong of the tri-AMM will be classic x*y=k constant product pools for volatile assets (0.27% fee), while another prong will be the stableswap pools specialized for trading stable assets (0.0369% fee). 3xcaliSwap will also include a “Zap” and a “Multizap” allowing users to one-click “zap” into a single or multiple LP positions.

While the 0.27% fee may seem high from a trader’s perspective, 3xcalibur argues that aligning incentives with LPs generates deeper liquidity for traders and thus, lower slippage. Ultimately, the savings from this lower slippage should offset the higher fees traders have to pay, creating a better tradeoff than low fees and poor liquidity.

The third prong of the tri-AMM will be 3xcalibur’s credit market “3xcaliCredit”, hosting a borrowing and lending platform for fixed-maturity collateralized loans. The 3xcaliCredit money market uniquely uses no oracles or liquidators, and offers the permissionless creation of lending pools for any two ERC20 assets!

Every 3xcaliCredit pool has the following parameters:

• Collateral Token: What a lending pool accepts as collateral

• Asset Token: What a lending pool dispenses when collateral is deposited

• Minimum CDP: Minimum collateral value required to take out a loan

• APR: The fixed maturity rate borrowers pay/the yield lenders earn

• Maturity: The date of settlement; the last day for borrowers to repay their loan

Pool parameters are automatically adjusted by the protocol inversely with the amount of assets deposited by lenders. The more assets deposited by lenders, the lower the minimum collateral value and borrow rate fall (and vice versa). This third branch of the tri-AMM and its pools are powered by a different type of constant product formula.

It is important to make a distinction of the three components powering the credit market: lenders, borrowers, and liquidity providers.

Lenders deposit into the lending pools and earn yield paid by borrowers. Similarly, borrowers deposit assets to collateralize their fixed maturity loan and pay a borrow rate to the lenders of their pool. “Fixed maturity” refers to the fixed time window in which borrowers must repay their loan in order to retrieve their collateral. Settlement immediately follows once a pool reaches maturity, and borrowers who have not repaid their loans will no longer be able to retrieve their collateral.

Liquidity providers play a fundamental role in supplying the money market. Unlike lenders who only deposit the asset being lent from a pool, LPs deposit both assets at a ratio determined by each pool’s supply and demand (maintaining the constant product).

Liquidity providers create “backup” liquidity for borrowers and lenders alike, and are the primary market makers of 3xcaliCredit. Borrowers and lenders both pay their pool’s LPs a 1.25% annualized fee, and LPs earn from spreads that vary by volume. They can earn additional yield when more assets are being borrowed than supplied by lenders, since LP backup liquidity is then used to supply borrowers.

Settlement payouts prioritize lenders before LPs, and with the perspective that liquidity providers “insure” lender deposits, this makes sense. Should bad debt exist at the point of a pool’s maturity, lenders are first in line to redeem their Insurance tokens and claim “backup” assets provided by LPs. After lenders are repaid, remaining collateral from borrowers who defaulted on their loans is then distributed to LPs. Although they take on greater risk, LPs have ways to hedge as well.

3xcaliCredit participants can meaningfully customize their risk and return. Borrowers closest to the minimum CDP pay the highest borrow rate, or can deposit more collateral to reduce the rate. Lenders can sacrifice their insurance in exchange for higher APR, or they can retain their coverage if they fear mass defaults.

Beyond a borrowing a lending platform, 3xcaliCredit can perform as a composable credit DeFi base layer! Protocols can plug into 3xcaliCredit and build or improve all types of onchain products. 3xcaliCredit can power decentralized credit swaps, interest rate swaps, raising startup capital, zero coupon bonds, and much more.

Credit default swaps (CDS) are basically a form of coverage for lenders. Should a borrower default, lenders with a CDS are repaid their principal and any interest from whoever they purchased it from. Using 3xcaliSwap pools, the protocol can facilitate a CDS market for users to trade lenders’ Insurance tokens.

3xcaliCredit also inspires a tokenized interest rate derivatives market. Lenders can swap ERC20 Interest Tokens on a secondary market in order to hedge or speculate on future interest rates.

3xcaliCredit can even position itself to offer permissioned under-collateralized loans to institutions or other credited individuals. Potential also lies in being a debt financing tool for emerging protocols, where startups can take out an 3xcaliCredit loan using their native token as collateral. With this, new projects can avoid sacrificing portions of their token allocation in order to raise necessary capital.

The governance branch of the protocol is where users can lock $XCAL, vote, claim rewards, and where protocols can deposit bribes for both 3xcaliSwap and 3xcaliCredit pools. This makes 3xcaliCredit the first known credit market with pool bribes.

veXCAL holders decide how $XCAL emissions are distributed amongst 3xcalibur pools, so naturally protocols have an incentive to buy and lock $XCAL themselves, or bribe veXCAL holders to vote for their pools. Protocols may only deposit governance-approved assets as bribes, and can submit a whitelist request through 3xcaliGovern to add new assets.

Unr3kt is a product stack dedicated to “solving the problems of OpFi”. This includes impermanent loss protection, depeg insurance, and its own native stablecoin.

The “ILinsure” product aims to iterate on the existing attempts to protect liquidity providers from dreaded impermanent loss. ILinsure has little documentation so far, but ultimately will be a product for insuring LPs against impermanent loss. The team has also confirmed they have an early stage proof-of-concept built.

As of right now, the depeg insurance product is still in the research and development stage. It will compare to something like the Y2K Finance, but will likely be incorporating the future $XDOL stablecoin and 3xcaliCredit pools.

Currently, the protocol has no official partnerships it has announced given it is unlaunched. However, the 3xcaliCredit money market is a massive gateway for new project integrations, and the 3xcaliGrant program for potential partners is an efficient way to onboard new collaborations as well.

$XCAL Price: N/A

Market Capitalization: N/A

Circulating Supply (at launch): 21,000,000

Total Supply: 100,000,000

Learn more about token distribution here, vesting here, and finished public round here.

Only 1.7% of the total liquidity mining emissions to be distributed in the first 8 weeks. Weekly emissions decay is capped at 1%, but adjusts automatically to eventually reach 2%. This keeps a steady flow of rewards with a constant incentive to lock over time.

On top of this, 3xcalibur takes a new approach where both weekly decay and tail emissions are algorithmically adjusted every epoch based on the current amount of locked $XCAL as well as emissions history.

$XCAL can be locked from 1 week to 3.69 years, returning more veXCAL per $XCAL the longer the lock duration. Lockers collect protocol fees, emissions, and participate in governance. Fees collected come from 3xcaliSwap and 3xcaliCredit activity, and in the future Unr3kt products and the $XDOL stablecoin.

veXCAL balances are represented by “veNFTs” given to users. While it is non-fungible, users can still split their votes on 3xcaliGovern across different pools. Users can allocate votes only once per epoch, solving Solidly’s infamous double voting issue. If a user locks multiple times, then multiple veNFTs are created. However two veNFTs can be consolidated into one, where the new lock duration is the longest of the two.

3xcalibur will be a fantastic addition to Arbitrum and its broader DeFi ecosystem. Its robust tri-AMM infrastructure makes 3xcalibur an ideal hub for trading, stableswaps, and borrowing and lending all in one. A novel suite of DeFi technology with a composable liquidity framework is coming to Arbitrum, and none other than the Insurgents are leading this mighty initiative.

Follow Me on Twitter

Join the Galaxy Box

Follow 3xcalibur on Twitter

Join the 3xcalibur Discord

DISCLOSURE: I hold a small amount of $XCAL (<1% of my portfolio). I was not asked to write this article and have not been compensated in any way. The information provided in this article is solely for educational purposes and should not be considered as financial advice. The views expressed in this article are my own and do not necessarily reflect the official policy or position of any company or organization. Readers should always conduct their own research before making any financial decisions.