The goal of Phantasm Finance is to further modularize leveraged long and short positions in crypto, make them more accessible, and make use of yield tokens to secure them against market conditions. That's a lot of words, so let's dissect it.
A long position is initiated with Coin X and Stablecoin Y. To do so Imagine a pair that lets you use Coin X as collateral to take out a loan for USDC.
- You deposit $100 of Coin X
- You take out a loan of $60 in USDC against that $100 in coin X
- You buy more Coin X with that $60
- Deposit the Coin X you just bought as collateral
Then, if Coin X moons you have $200 of collateral (Assuming the $160 of collateral appreciated in value $40), but only owe the lending provider $60 of USDC, so you can repay the debt to claim your collateral, which is worth $40 more than just holding the Coin X
The reverse can be done to create a short position, where debt is owed in Coin X to collect the stablecoin collateral (Coin X is assumed to decrease in value, so it can be bought back for less).
Phantasm Finance does this using Aave and Sushiswap at the moment, but many other implementations with lending providers like CREAM, Kashi, Compound are also possible, in addition to using other DEXes to trade with.
Each position you create is then minted into an NFT that can either be redeemed for its underlying assets or traded on other markets.
Each Phantasm Position follows the ERC721 standard so it can be traded on other markets or further built into future derivatives.
Yield Tokens is debt to someone holding collateral in a lending pool. Since the debt is fixed, a sudden spike in APR would increase the value of the bond greatly. Conversely, lenders close to their limits would be closer to liquidation. As Long/Short postions require lending if they buy a FRB on a pool which they are lending from, or similar pool, the bond would appreciate with any spike in APR, which would allow for them to 'insulate' their short position against the movemements of the lending market.
The demo runs on a Polygon Mainnet Fork. The Easiest Way to replicate this yourself is spin up a ganache blockchain, and use the migrations found in the truffle project to deploy the Phantasm Contracts. Add the ganache chain to your Metamask and you will then be able
We plan to continue work on Phantasm Finance after the hackathon ends, with some of the improvements outlined below
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Integrate with other lending protocols such as Compound and making use of other DEXes on the Polygon Network such as Quickswap.
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Gas Efficiencies to make this economical on Mainnet
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UI/UX Improvements