Absorber vs. Sponge — A Comparison of 2 New DeFi Apps
Learn about two of the latest DeFi apps to launch on Binance Smart Chain, Absorber and Sponge.
The DeFi market is booming on Binance Smart Chain (BSC). Discover two of Smart Chain’s latest DeFi protocols —Absorber and Sponge — and learn how they differ from one another.
Got Abs? — Introducing Absorber
Absorber is a revolutionary yield farming protocol that combines innovative methods and a hybrid approach to solve DeFi’s major problems, namely rug-pulls, bugs, hyperinflation, gas fees, and Impermanent Loss.
The Absorber Protocol defines itself as “a decentralized deflationary yield farming protocol.”
While decentralized finance (DeFi) is undoubtedly revolutionary, it’s not without its challenges. In 2020, $200 million dollars out of the $13 billion dollars of total value locked (TVL) was stolen or hacked from DeFi protocols.
The reason for this is because DeFi projects will typically launch smart contracts where an owner continues to have control after it has gone live. This allows for exploits, bugs, and rug-pulls.
Absorber further explains the problem with this construct, stating: “Let us add that ownership of a contract is actually centralized finance in the same way that a bank has power to freeze your funds.”
Furthermore, most DeFi projects are hyper-inflationary, which further cuts into revenues users garner on yield farming protocols. Absorber comments on the further implications of this feature, saying: “two more headaches: the token’s value often coming close to zero and impermanent loss (what you put in is worth nowhere close to what you get out at the end).”
Absorber has a few features that make it stand out from the rest of its DeFi counterparts.
To begin with, Absorber supports a no-contract Interaction for its Passive Yield Farming (PYF) function. Under the PYF function, special farming contracts exist that don’t require permanent locks on users’ funds. This means that liquidity providers can rest easy in the knowledge that their funds cannot be rugged or otherwise exploited.
Secondly, under the PYF function, Absorber does not charge any claim fees. While this was made possible by the protocol’s recent migration to Binance Smart Chain, this feature works out in favor of users’ revenues. Absorber adds: “The protocol automatically manages the claiming process so that you pay no gas fees to receive your rewards.”
Thirdly, the PYF function supports an ecosystem where Impermanent Loss does not exist. This is made possible by the protocol’s design: “Because you’re not staking two different cryptocurrencies, your balance never decreases no matter what.”
Fourth, the Absorber Protocol is deflationary by nature because it continues to grow at an exponential rate since it locks a compounding portion of the supply into itself.
The fifth feature that causes Absorber to stand out is the fact that it absorbs a portion of all transfers and transactions in and out of its liquidity pool. This makes the pool perpetually self-sustaining with an ever-rising floor price.
Sixth, the Absorber Protocol supports democracy and is modifiable. ABS tokens serve a double function, also working as voting rights. Absorber explains: “Since the tokens function as DAO voters, farmer-traders can use them to execute their will in the protocol.”
Finally, Absorber states that it is impossible to pull the rug because the function does not exist. When the smart contract launched, its underlying code destroyed its corresponding private keys, making it impossible for anyone to exploit the smart contract. The project initially explained its thinking, stating: *“To be true to the grand vision, the Absorber protocol must be fully decentralized. This requires governance to be added for the community to control the protocol. After “ACE” (Absorber Creation Event), the contract keys will be burned, and we’ll switch to an entirely decentralized mode of operation.” *True to its plan, the protocol is the sole owner of its own forever growing, locked, and unwithdrawable liquidity pool.
Due to its innovative one-of-a-kind features, Absorber raised 349 ETH in less than 3 minutes during its presale. It eventually launched on Uniswap in December 2020, with several million dollars in volume provided by early investors and traders.
Getting Soaked — Introducing Sponge
The Sponge token is a “high passive yield token that absorbs tokens from other transactions.”
The protocol has a maximum token supply of 100,000 SPG, which is designed to decrease over time. In a feature they are calling ‘implicit burn’, Sponge’s maximum supply decreases at a certain percentage per transaction.
Sponge explains: “We also have 0.16% that is burnt forever (because we want $SPG to be more and more rare) but be aware that the burn address will also get redistribution so we will have increasing ‘implicit burn’ over time.”
80% of the total SPG supply was emitted in the initial two months of the pool’s existence via a Tenet liquidity tap (BNB/SPG).
Tokenomics are as follows: 10% used to provide initial liquidity with 50 BNB coming from dev pocket with another 10% are kept by team for events and further dev if needed. Moreover, Sponge had plans that “10% supply will probably be used to be emitted as a stacking option in a well-known dapp of BSC” and finally, 6.66% taxes on each transaction would be levied per transaction. 5% of these taxes are distributed proportionally amongst all SPG holders.
In other words, 5% of total transactions are reshared to all owners. Thus, the more you HODL the more you get.
Here is how its works:
Say you hold 1000 SPG and someone sells 100 SPG. In that case, only 93.34 SPG will be sold and 0.16 will be destroyed forever. This is the 0.16% burn.
1.5% will be sent between partner and dev wallet for potential use later.
5 SPG will be sent proportionally to every holder of SPG token (5% redistribution).
And since you hold SPG, you have 1% of the supply, so you will get 0.5 SPG tokens automatically distributed to your wallet.
On February 4, 2021, Sponge introduced a new token emitted by its protocol. The token, named SOAK, is designed to give value to SPG while simultaneously providing Sponge users with stacking options.
Sponge explains that “2% of every transaction are sent to the Soak contract and will be used in the “Soak the Sponge” event.”
The ”Soak the Sponge” event is simply a staking pool where the protocol converts SOAK to BNB. 66% of this BNB is used to buy SPG, which, in turn, makes SPGs price rise. Moreover, 50% of the SPG will add locked liquidity with the BNB left. The protocol is designed to grow the value of SPG vis the symbiotic design of the Soak the Sponge Event.
In its most recent update, Sponge outlined details to introduce a new token that would serve a number of purposes in its ecosystem. The new token will serve as a governance token while simultaneously introducing deflationary measures for users. Further information is yet to be released.
If you are looking to participate in a yield farm on Binace Smart Chain that allows you to maintain control of your funds while simultaneously supporting low fees and deflationary yield farming, Absorber might be the right choice for you.
However, if you are looking for a simple, high yield passive farming option, Sponge could be an option.
You can access Absorber and Sponge on Binance Smart Chain via the Trust Wallet app.