Eclipseum — The Transaction Fee Generator : (1Y Fees / Liquidity) = 138% This Week
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Introduction
Eclipseum is designed to be a store of value asset that generates value for ECL holders over time. This is accomplished using two AMM liquidity pools which generate transaction fees that increase the ECL price. This week ECL holders enjoyed a 138% annualized increase in the ECL price from transaction fees generated alone, in addition to ECL Price increases from ECL bought.
1Y Fees / Liquidity Metric
The (1Y Fees / Liquidity) metric is an indicator of how much profit a liquidity provider can expect from the AMM liquidity pool transaction fees. It can be seen on the Uniswap Info page here and also as shown below.
So, for the WBTC-ETH pair for example, a liquidity provider could expect their value held in the liquidity pool to increase by 8.45% over the course of a year from transaction fees if the current transaction volume is maintained.
Eclipseum AMM Liquidity Pools
Eclipseum contains two AMM liquidity pools. The ECL pool enables users to buy and sell ECL and ETH, while the DAI pool enables users to buy and sell DAI and ETH.
Both AMMs charge a 0.3% transaction fee on every transaction. All of the fees captured by the ECL pool remain in the ECL pool. Half of the fees captured by the DAI pool are transferred to the ECL pool. These fees accumulate as ETH in the ECL pool, increasing the ECL price in ETH over time.
When ECL is bought from the ECL pool, the ETH balance of the ECL pool increases from the ETH spent by the buyer, and the ECL balance of the ECL pool increases as a result of the elastic supply system minting ECL. As a result of a Buy ECL transaction, the ETH balance increase is greater than the ECL balance increase, so the ECL Price in ETH increases from every Buy ECL transaction.
In this way, ECL token buyers are also the ECL liquidity providers.
The ECL price in ETH increases both from users buying ECL, and from transaction fees generated by both AMM liquidity pools. This is a system that thrives on volatility. More volatility means more transaction fees.
Previous Week Transaction Fee Analysis
This analysis is based on the previous week of data, ranging from 11/20/2020–11/27/2020. The following chart depicts the ETH Balance of the ECL Pool, and the Transaction Volume in ETH generated by each AMM liquidity pool.
Lets dive into the data:
The transaction volume on the ECL pool for the week was 1,289.16 ETH. This translates to 3.87 ETH in fees captured by the ECL pool.
The transaction volume on the DAI pool for the week was 262.77 ETH. This translates to 0.79 ETH in fees generated by the DAI pool, of which 0.39 ETH was transferred to the ECL pool.
So, 3.87 ETH + 0.39 ETH = 4.26 ETH added to the ECL pool this week from transaction fees. The ETH Balance of the ECL pool at the time of writing is 161.04 ETH.
Extrapolating the fees generated out over a year, we arrive at the metric (1Y Fees / Liquidity) = 138%. Compared to the Uniswap pool values, this is quite significant.
Of course, the buying and selling of ECL significantly affects the returns over the course of a year, so actual ECL returns will be heavily influenced by supply and demand for ECL.
Conclusion
Analysis of Eclipseum’s first week of significant volume suggests a bright future for this new system. Holders of ECL enjoyed significant value captured by the Eclipseum system from transaction fees this week. These transaction fees captured by the system create incentive for new users to buy ECL, further increasing the value held in the ECL pool. If you are interested in learning more, I suggest giving the whitepaper a read, joining the telegram or discord, exploring this data yourself using the historical chart tool, or reaching out to me directly at taylor@eclipseum.org.
