Introducing Beluga Protocol - Innovating off of Curve.fi on Solana

4 min readAug 4, 2022

As the Solana DeFi ecosystem grows, we realize that there is a need for a simple swap product with a great user experience that aligns with Beluga’s vision to simplify DeFi. Alas, Beluga is excited to announce the launch of Beluga AMM DEX and the associated liquidity mining program part 1, which will run in the month of September 2022.

DISCLAIMER: Exact details are subject to change at the official launch date

Background & Research

Much have been learned about Curve.fi last DeFi summer.

Curve is one of the most popular platforms in DeFi because it favors stability and composability over volatility and speculation.

But the high gas fee on Ethereum limits trades on Curve to Whales-only. The Beluga team sees the opportunity that Solana gives to everyone in DeFi and decides to build an innovative version of Curve.fi on the Solana ecosystem.

One innovation is that Beluga is able to use yield-bearing tokens in lending protocols in its liquidity pools, thus achieving a second layer of utility and potential earning from the same amount of investment.

For example: When USDC is lent out on the Solend platform, it is exchanged for a liquidity token called cUSDC, which automatically accumulates interest for the holder. Holding cUSDC means you have a right to withdraw USDC from Solend plus interest. Beluga users are able to use cUSDC in its liquidity pools, thus achieving a second layer of utility and potential earning from the same amount of investment.

The ability to use Solend’s cTokens on Beluga exemplifies the composability benefits in the DeFi ecosystem. And Solend is just one example of an external DeFi protocol with which Beluga integrates.

Liquidity mining is no longer a “new” concept ever since it was popularized by Uniswap and Sushiswap in 2020. That said, the crypto market understanding of liquidity mining is continuously evolving as projects and investors explore better iterations of the original concept.

In essence, a liquidity mining program is a growth hacking strategy to attract users to one’s platform. Similar to how traditional web 2.0 tech companies would run referral programs or offer free products before eventually turning growth into revenue.

While the Beluga team is preparing for this liquidity mining program, we researched multiple programs that have been conducted in the past and implemented one that aligns with our long-term goals. Too often, a liquidity mining program falls prey to mercenary capital by providing excessive short-term rewards that benefit short-term traders instead of the community member/long-term investors. Recently, a notable crypto fund, Mechanism Capital, wrote a report regarding this matter.

BELA Liquidity Mining / Part 1

The total transaction fees are 0.04%, liquidity Providers (LPs) on Beluga’s AMM DEX who provide capital for the pools will receive 0.02% and 0.01% will go towards Beluga product development, while the remaining 0.01% will be used to buy back BELA and distribute revenue shares to BELA stakers.

In the foreseeable future, Beluga will conduct a bi-weekly liquidity mining program. In this part 1, rewards will apply to the liquidity providers for the following pools:

We welcome feedback from the community as we run this program for the next 12 months.

How it works

Beluga users who provide liquidity to the above pools will earn BELA based on the amount of time and the size of their contribution to the pool. The exact formula can be seen here:

Rewards Distribution

Liquidity Providers will be able to claim the BELA rewards at the end of the liquidity mining program. There will be no vesting for the first Beluga Liquidity Mining program.

Future Liquidity Mining Plans

Rewards for more pools/trading pairs
Stablecoin pools
Rewards for permissionless pools upon DAO approval

Risks

When providing liquidity to an AMM-based DEX, users are exposed to impermanent loss risk. In short, an impermanent loss is the loss of capital that has been deployed to the pools. This happens when the ratio of the tokens in the pools becomes uneven. The difference between the value of one’s tokens in the pool compared to the value if one were to just simply hold the tokens is the impermanent loss.