Shell Protocol
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Deposit your stablecoins into our liquidity pool and receive shells, a natively liquid, diversified and yield bearing asset.
How it works
- Shell Protocol is a smarter home for DeFi. The long-awaited Shell v2 lets you build capital-efficient AMMs that can evolve over time, design transactions with seamless atomic composability, and offer up to 4x cheaper gas costs for your users. It’s a new ecosystem of financial primitives (like AMMs, lending pools, algorithmic stablecoins, or NFT markets) forming the next wave of leading DeFi projects.
- Building with Shell v2 doesn’t just mean better smart contract architecture. It also unlocks the power of the Shell network effect, granting your project instant interoperability with every other Shell-native primitive — past, present, and future.
Shell v2: Proteus and the Ocean
- Shell v2 is built on two innovations: Proteus, an AMM engine, and the Ocean, a shared multi-token ledger for composing DeFi primitives.
- Proteus is a tool that can precisely implement any trading strategy, allowing concentrated liquidity with fungible LP tokens, as well as bonding curves that can evolve over time. As an AMM engine, it allows financial engineers to design custom AMMs without ever writing a line of Solidity code.
- The Ocean is a simpler and more efficient home for composing DeFi operations. It is three things in one: a shared multi-token ledger, a standardized accounting framework for DeFi primitives, and a smarter system for composing primitives.
- Shell Protocol is open-source, with public reference implementations of both Proteus and the Ocean available on GitHub.
What is Proteus? How does it work?
- The purpose of Proteus is not to create the most capital efficient AMM per se. The purpose is to build an AMM engine that that can implement any trading strategy. That way, financial engineers can design trading strategies without ever having to write a line of Solidity code. An operating system is an abstraction layer between application developers and a computer’s hardware. Proteus’ AMM engine is an abstraction layer between financial engineers and the Ethereum Virtual Machine.
- How is this possible? An AMM’s trading strategy is determined by the shape of its bonding curve. For example, a flat bonding curve has highly concentrated liquidity, while one with high curvature has diffuse liquidity.
- Proteus uses a bonding curve algorithm based on conic sections, highly flexible geometric objects. This allows the algorithm to replicate virtually any curve, any trading strategy. While it may seem complicated, the algorithm is based on mathematics you could teach to a high school student. In the figure below, we fit Proteus to a Stableswap curve.