SenpaiSwap: Potential SushiSwap Killer That Owns Its Liquidity With Degen Staking APYs (& Hentai Meme Magic)
It’s built on BOBA Network, Ethereum’s newest Layer 2 as a competitor to Oolong Swap, which currently has the majority of BOBA TVL.
What makes SenpaiSwap unique is it takes the concept of DEX Owned Liquidity (DOL). The idea of protocol owned liquidity was innovated by Olympus DAO (OHM) and forked a gazillion times due to it’s incredible success.
Unlike 99% of OHM forks which are just ponzis with no utility, Senpai applies these innovations to one of the most important DeFi building blocks: a decentralized exchange (DEX).
Now, why is DOL important? Because most DEX’s “rent” liquidity by incentivizing users to provide liquidity in exchange for farming rewards in their native token.
This creates massive inflation of the native token as whales farm and dump the token for profit. As the native token price bleeds, farmers start looking for new opportunities for higher APYs and move their TVL over to new farms.
This is exactly what’s happening to the $OLO, the native token of Oolong Swap. As a result, their TVL has dropped over 38% from the peak since its pool 2 liquidity mining started. We expect the Oolong TVL to drop even more as farmed tokens get dumped onto the open market.
(Compare that to only a 13% drop in SenpaiSwap TVL during the same time period. SenpaiSwap’s TVL was more stable because the DEX owns the majority of the liquidity. More on that in a bit.)
Renting liquidity does work somtimes. The team can save the token from going to absolute $0 by adding new features like buybacks with trading fees, burns, lending, lotteries and other use cases for the native token. This is why JOE, CAKE and SUSHI are still around while their competitors have failed. But often, even these additional use cases are not enough to stop the bleeding.
The Bond (Coupon) Model
Senpai uses an entirely different model which owns its liquidity instead of renting it from users. It uses a concept innovated by Olympus DAO called “bonds” or coupons. Basically, users call sell their LPs (ie. ETH-DAI) to the protocol and receive discounted SENPAI tokens, vested over 5 days.
So for example, if bonds are at a 40% discount, a user can receive $1,000 worth of SENPAI tokens by selling the protocol $600 of ETH-DAI LP, vested over 5 days.
This means that the protocol now owns the ETH-DAI LP permanently and there is no risk of the TVL migrating elsewhere.
Now, we know what you’re thinking: LPs would just buy bonds and then dump their discounted $SENPAI and rekt the price like every other native DEX token. Well, 0xKhun, the gigabrain lead dev has already come up with an innovative solution, but is holding it close to his chest to prevent other teams from front running the idea. All will be revealed once the first DOL pairs are live.
High APY Staking
Now, the Senpai takes this idea one step further by introducing auto-compounding staking of $SENPAI. This encourages $SENPAI token holders to stake their tokens with the protocol instead of selling them for incredible APYs.
I know what you’re thinking “how can those 5 figure APYs be sustainable??”
Well, projects like Olympus, TIME and Klima have been printing 5-figure APYs for months. The reason is likely a combination of:
These projects have sizable treasury (from bond incentives) that can be deployed to accrue more value to token holders
(3,3) meme where if early holders diamond hand, price just keeps going up as new people buy in to earn the degen APYs
Auto-compounding yields also means users don’t need to actively sell and re-LP to compound. Many people simply staked and forgot about their OHM or TIME, then came back rich a few months later. Those who stay staked while others sell actually gain more market share of the total supply.
This bonding and rebase mechanism is one of the most genius DeFi innovations, which is why we see so many OHM forks these days.
Here are the Olympus DAO docs if you’re interested in learning more about their protocol: https://docs.olympusdao.finance/main/
Okay now that you have a rough understanding of how SenpaiSwap works and why it’s an innovative AMM, here’s why we’re bullish on it (outside of the experimental tech):
High Treasury to Market Cap Ratio
The Senpai treasury is valued at over $6.6 million USD, which is 49% of its market cap. For reference, Olympus’s treasury is sitting at 20% of mcap and TIME is sitting at 35%. This implies the SenpaiSwap market cap is undervalued relative to the market leaders.
High Auto-Compounding APY Will Attract Degens
Senpai is currently paying stakers 67,883% APY (effectively 1.8% per day before auto-compounding). Compare that with only ~250% APR for staking in the OLO-ETH and OLO-USDC pools on Oolong swap and 878% APR on SwapperChan, another DEX on BOBA.
We believe that due to the passive run up and subsequent dump during the launch, the top holders of $SENPAI are mostly long-term believers who will continue holding and support the price (more on price action in a bit).
Coming Soon: Bullish Rebrand
As you probably know, projects optics are often more important than fundamentals. That’s why the team has announced a full frontend rebrand to something more professional.
Although it hurts the founding team’s feelings, some community members feel the current anime bunny girl on the home page may be too lewd for an novel AMM that aims to dethrone current leaders.
Crypto Twitter Is Starting To Notice SenpaiSwap
Khun-sensei (🧋,🧋) @0xKhunSenpai has the best rewards on the @bobanetwork and our treasury just broke 8M 💜 https://t.co/TrcVa1bEKz
Price Has Bottomed And Now Back In It’s Accumulation Range
If we look at the Senpai chart, we see a massive pump and retrace during the first few days of launch. This is from early users rushing to bond at big discounts, and selling their tokens over the next few days. Senpai also airdropped tokens to LPs, which predictably get dumped.
Now, the chart looks like it has found a bottom at $30 and is back in the re-accumulation phase.
Why is this a good buying opportunity?
Well, have you ever checked the chart of an altcoin when it’s pumping hard and wish you accumulated the bottom 2 months ago when it was unknown or while everyone thought it was dead?
Well, right now may be the biggest accumulation opportunity for $SENPAI since most people don’t know about it, or realize how massive it could be yet.
If you’ve been around for a while, then you’ll be familiar $SUSHI, the hottest money printer farm for a week, then “died”, and then reborn into an innovative DeFi bluechip.
Sushi launched by “vampire attacking” (incentivizing users to move their liquidity over) from Uniswap. We have a strong feeling $SENPAI will do the same to Oolong when the next round of coupons launch.
The AMM + DOL Narrative Is Catching On
Due to the success of Olympus DAO, more and more projects are exploring combining OHM’s token distribution model with various utilities. There’s been some interesting discussion around an AMM with DOL or protocol-owned liquidity which is exactly what Senpai is.
VADER is another project that launched on ETH layer 1 that uses an AMM with owned liquidity that is getting a lot of attention right now, including strong price action. This makes us very bullish on the DOL / AMM usecase as a whole. VADER currently sits at $101M market cap.
It’s Still Early
SenpaiSwap launched less than 10 days ago and still hasn’t listed on Coin Gecko yet. Maybe the team is waiting to finish the rebrand, or perhaps the CG team is just slow. Either way, most of the crypto world haven’t heard of SenpaiSwap yet.
Plus, the team recently announced more front end features, including charts as well as new bonds coming soon.
While we think Senpai Swap can see massive upside from here ($200M mcap potential in the mid term), the main risk is BOBA layer 2 doesn’t gain any traction. However, if that’s the case, Senpai still has a sizable treasury and they can pivot to other chains or deploy other revenue-generating strategies as a DAO.
The success of the project will come down to the team and community support. So far, the team has proven to be competent, transparent and active. While they seem understaffed (they announced they’re onboarding new developers to help with the workload), they appear very serious and committed to the success of this project, which we feel is the most important determining factor of any project’s long-term success.
How to Buy $SENPAI
SenpaiSwap is on BOBA layer 2 so you’ll need ETH on their network first. It’s a super simple process to bridge and once you use it, you’ll be amazed at how fast the tx’s are and how cheap the gas is compared to ETH.
Bridge over DAI as well or buy DAI on Oolong Swap (the liquidity for $SENPAI is with $DAI but SenpaiSwap doesn’t have an ETH/DAI pairing yet)
(Chads only) Stake your $SENPAI for 67,283% APY
SenpaiSwap Website and App: https://senpaiswap.com/
SenpaiSwap Discord: https://discord.com/invite/senpaiswap
SenpaiSwap Twitter: https://twitter.com/senpaiswap
Follow DeFi Chads Twitter: https://twitter.com/ChadsDefi