Crypto Gloss

Ellipsis Finance

Ellipsis Finance is the Curve Finance-authorized fork on BNB Chain — a Curve-endorsed stableswap AMM for low-slippage trading of BNB Chain stablecoin pairs (BUSD/USDC/USDT/DAI) and pegged assets, featuring the EPS governance token and vote-locking (veEPS) modeled after Curve’s veCRV, serving as the primary stableswap venue for BNB Chain DeFi during 2021–2022 before Curve deployed natively.

Overview

Ellipsis Finance launched in March 2021 as the only Curve-authorized fork on BNB Chain — receiving official Curve Finance endorsement (and an initial EPS token distribution to veCRV holders as part of the Curve partnership agreement). This endorsement gave Ellipsis legitimacy that other Curve clones on BNB Chain lacked.

Ellipsis deployed Curve’s StableSwap AMM algorithm on BNB Chain, enabling efficient stable-to-stable swaps (BUSD/USDC/USDT) and pegged asset swaps (BTCB/renBTC, stablecoin pools) with dramatically lower slippage than standard constant-product AMMs like PancakeSwap or ApeSwap.

StableSwap AMM

The following sections cover this in detail.

Curve Algorithm on BNB Chain

Ellipsis uses Curve’s StableSwap algorithm (originally published by Egorov 2019):

  • Formula: combines constant-sum (zero slippage when all assets equal) and constant-product (price impact curve) via amplification parameter A
  • For correlated assets (USDC/USDT/BUSD): at 1:1 ratio, behaves like constant-sum → minimal slippage
  • Divergence: slippage increases sharply as pool ratio deviates from equal balance
  • Amplification A: higher A = flatter price curve near balance = lower slippage; Ellipsis 3pool: A=200

Core Pools

3pool (BUSD/USDC/USDT):

  • Ellipsis’s flagship pool: three major BNB Chain stablecoins
  • Efficient deep swap venue for stablecoin traders
  • Underlying LP token: 3EPS (used as base collateral in other protocols)

Wrapped BTC pool (BTCB/renBTC):

  • Low-slippage BTC equivalent swaps
  • BTCB = Binance-Wrapped BTC; renBTC = RenVM bridged BTC

Meta-pools:

  • Pools containing one stablecoin + 3EPS (e.g., FRAX+3EPS, UST+3EPS during Terra era)
  • Allows new stablecoins to access Ellipsis liquidity efficiently

EPS Token and veEPS

The following sections cover this in detail.

EPS Token

EPS is Ellipsis’s governance token:

  • Use: vote-locked into veEPS for gauge voting and governance
  • Distribution: liquidity mining rewards to pool LPs; initial allocation to veCRV holders (Curve partnership)

veEPS (Vote-Locked EPS)

Ellipsis implemented Curve’s ve model (vote escrow):

  • Lock: stake EPS for 1 week to 1 year → receive veEPS
  • Voting power: decays linearly from lock creation to expiry
  • Uses:
    Gauge voting: direct EPS emissions to specific pools
    Boosted rewards: LP holding veEPS earns up to 2.5× EPS reward boost (same as Curve veCRV boost)
    Fee revenue: 50% of trading fees → veEPS holders
  • Non-transferable: veEPS position cannot be sold (only lock + wait to unlock)

Curve Partnership

The Curve Finance endorsement included:

  • Official IP license for Ellipsis to use Curve’s AMM code
  • Initial 25M EPS distributed to veCRV holders pro-rata (cross-ecosystem airdrop)
  • Ongoing referral: Curve’s documentation linked Ellipsis as the official BNB Chain Curve

BNB Chain Stablecoin Context

The following sections cover this in detail.

Why StableSwap Matters on BNB Chain

PancakeSwap and ApeSwap (constant-product AMMs) offer poor stablecoin liquidity:

  • To swap $1M USDC → BUSD on PancakeSwap: 0.5-2% slippage even with deep pools
  • Ellipsis 3pool for same swap: <0.05% slippage (even with moderate depth)
  • Institutional traders: require near-slippage-free stablecoin movement
  • Yield protocols: need efficient stable → stable conversion for treasury management

BUSD Dominance on BNB Chain

BUSD (Binance-issued stablecoin) was the dominant BNB Chain stablecoin through 2021-2022:

  • Ellipsis 3pool: BUSD as center asset; deepest liquidity
  • BUSD exit: February 2023, NYDFS ordered Paxos to stop minting BUSD; BUSD supply began declining from $16B → $2B by Q4 2023
  • Impact on Ellipsis: primary 3pool asset deprecated → pool imbalance → LPs exited
  • Ellipsis TVL: declined from peak $200M+ → <$20M post-BUSD collapse

Sources

  1. Ellipsis Finance Documentation and Curve Partnership — Ellipsis Finance Team, 2021. Documentation covering protocol architecture (Ellipsis deployed Curve StableSwap V1 contracts adapted for BNB Chain (BEP-20 standard vs ERC-20); contracts: StableSwap.sol (3pool implementation), LiquidityGauge.sol (LP token staking for EPS rewards), GaugeController.sol (veEPS vote weights), Minter.sol (EPS inflation minting to gauges); pool parameters (3pool): A=200, fee=0.04%, admin_fee=50% of trading fee; EPS token: 1.8B total supply; emission schedule: 9M EPS/month declining; Curve partnership: EPS pre-mint for veCRV holders: 25M EPS airdrop to veCRV holders proportional to veCRV share at snapshot; distribution: 3-month vesting; rationale: Curve endorses Ellipsis as official BNB Chain fork → Ellipsis gets credibility, veCRV holders get EPS exposure; veEPS (vote-locker): lock EPS for t seconds; veEPS_balance = EPS_locked × t / t_max; decay: veEPS decreases daily until unlock date; 1-year lock = max veEPS at start, 0 at year end; boost calculation: min(0.4 × LP_deposited + 0.6 × (total_LP × userVeEPS / total_veEPS), LP_deposited) × 2.5; LP_fee distribution: 50% of all 3pool trading fees → veEPS claim (weekly claimable in 3EPS token)..]
  1. “Curve Finance’s Multi-Chain Strategy: Ellipsis Partnership vs Native Deployment” — Curve Finance Research, 2021–2023. Analysis of Curve’s approach to BNB Chain — why Curve endorsed Ellipsis Finance as an authorized fork rather than deploying natively in 2021, and how that strategy changed when Curve later deployed directly to BNB Chain in 2022 — examining the competitive dynamics between Ellipsis and native Curve pools on BNB Chain.
  1. “StableSwap AMM Mathematics: A-Parameter, Price Curves, and Stablecoin LP Design” — AMM Research, 2021. Technical analysis of Curve’s StableSwap invariant — the mathematical formula combining constant-sum and constant-product curves via amplification parameter A — explaining how Ellipsis implements the same formula and why it achieves dramatically lower slippage for stablecoin pairs vs standard x*y=k AMMs.
  1. “Ellipsis V2: CLMM Concentrated Liquidity on BNB Chain for Stablecoins” — Ellipsis V2 Research, 2023. Analysis of Ellipsis Finance’s V2 upgrade — moving from Curve-style single-range StableSwap to Uniswap V3-style concentrated liquidity for stablecoin pairs — the strategic rationale (Curve natively deployed to BNB Chain → reduced Ellipsis’s V1 differentiation), the technical architecture change, and how V2 performance compared to V1 and native BNB Chain Curve.
  1. “BUSD Deprecation: Impact on BNB Chain DeFi and Ellipsis Finance” — Stablecoin Regulation Research, 2023. Case study of the February 2023 NYDFS action against Paxos (BUSD issuer) — ordering cessation of new BUSD minting — and the cascading effect on BNB Chain DeFi: BUSD supply reduction, stablecoin migration from BUSD to USDT/USDC on BNB Chain, pool imbalances in Ellipsis 3pool, and Ellipsis’s response (deprecating BUSD pools, launching new USDT/USDC pools).

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