Apr 4, 2023

Polaris DEX

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Strengths and Weaknesses

+ Strengths

  • Based on Balancer v2
  • Running on Aurora with fast, cheap transactions
  • Easy to use for experienced DeFi users
  • The platform is driven by algorithms
  • Opportunity to earn additional interest on your cryptocurrencies
  • Experienced and transparent team of developers

- Weaknesses

  • All algorithmic tokens from Phase 1 lost the peg
  • Risks with participating in DeFi
  • Relatively new protocol

Basic Information

Polaris DEX, a decentralized exchange (DEX), was forked from Balancer v2. Its development was divided into two phases, with Phase 1 being the Tomb Finance fork on the Aurora blockchain. Then, in Phase 2, Polaris DEX became a one-stop decentralized trading and investment platform on Aurora, powered by Balancer v2. Its liquidity pools, rather than order books, are used to facilitate trading on the Polaris DEX, which is a common model for DEXs in DeFi. Liquidity pools are smart contracts that define how traders can swap between assets, and also serve as the fundamental building blocks of the platform.

Functioning of the Protocols

The development and functioning of Polaris DEX can be divided into two phases.


This phase involved the Tomb Finance fork on the Aurora blockchain, during which the protocol was named Polaris Finance.

Inspired by the concept of algorithmic tokens, Polaris Finance aimed to create a stable, profitable, and secure platform for the Aurora blockchain, helping it to continue running as a fast, secure, and cost-effective blockchain.

As part of its development, Polaris Finance created multiple algorithmic tokens pegged to other assets such as NEAR, ETH, BTC, USDC, and BNB.

Seigniorage Pools

Users have the ability to create LPs  by pairing their tokens, such as ETHERNAL / ETH, and staking them in “Seigniorage Pools”. Initially, the rewards for these pools were in SPOLAR; however, after the end of its emissions, users can now earn passive income from trading fees and additional rewards in the governance token, xPOLAR.


Sunrise is where users can farm one or more of Polaris DEX's pegged assets using their SPOLAR. Each epoch in Sunrise lasts 6 hours.

When users deposit or withdraw SPOLAR into or from “Sunrise", they will be locked for 3 epochs along with any pegged asset rewards users may have earned.

If users claim pegged asset rewards, their staked SPOLAR tokens will be locked for the next 3 epochs, and they will only be able to claim rewards again 2 epochs later. These are standard rules across all boardrooms in DeFi.

During an epoch expansion, the maximum amount of pegged assets that can be minted is based on the current supply. If there are BOND tokens to be redeemed, 65% of the newly minted pegged assets will go to the treasury until it has enough to meet the redemption demand. If there is no debt, the expansion rate will be capped at the maximum allowed rate.

Algorithm stablecoins / Pegged Assets


Files Gitbook

The POLAR token was the first medium of exchange within the Polaris DEX ecosystem, designed with a built-in stability mechanism that aims to maintain its peg to 1 NEAR in the long run. It's important to note that while POLAR actively pegs via the algorithm, it is not collateralized and it is not, therefore, to be confused with a crypto or fiat-backed stablecoin.


Files Gitbook

The ETHERNAL token was the second algorithmic stablecoin within the Polaris DEX ecosystem, designed with a built-in stability mechanism that aims to maintain its peg to 1 ETH in the long run.


Files Gitbook

The ORBITAL token was the third algorithmic stablecoin within the Polaris DEX ecosystem, designed with a built-in stability mechanism that aims to maintain its peg to 1 BTC in the long run.


Files Gitbook

The USP token was the fourth algorithmic stablecoin within the Polaris DEX ecosystem, designed with a built-in stability mechanism that aims to maintain its peg to 1 USDC in the long run.


Files Gitbook

The BINARIS token was the fifth algorithmic stablecoin within the Polaris DEX ecosystem, designed with a built-in stability mechanism that aims to maintain its peg to 1 BNB in the long run.

It's important to note that while POLAR, ETHERNAL, ORBITAL, USP and BINARIS actively pegs via the algorithm, they are currently trading below their pegs (as of March 26, 2023).


The value of the Polaris DEX protocol and shareholder trust in its ability to maintain pegged assets close to peg can be measured by POLAR Shares (SPOLAR). When the protocol undergoes epoch expansions, pegged assets are minted and distributed proportionally to all SPOLAR holders who have staked their SPOLAR in “Sunrise”.


The BOND assets serve as unique tokens that can help in stabilizing the price of pegged assets by decreasing the circulating supply of pegged assets if the TWAP (Time-Weighted Average Price) falls below the peg.


Polaris DEX's Phase 2 involved the development of a one-stop decentralized trading and investment platform on Aurora, powered by Balancer V2. The platform is now known as Polaris DEX, and it was officially launched on December 13, 2022.

Polaris DEX phase 2 is a fork of Balancer v2. Balancer v2 is a DEX, automated portfolio manager, and price sensor that offers empowerd decentralized exchange and automated token portfolio management. Its unique approach flips the traditional index fund model; instead of paying fees to managers to rebalance portfolios, traders pay fees to liquidity providers who rebalance portfolios through arbitrage opportunities.

Balancer is the N-dimensional invariant surface, a generalization of Uniswap's constant product formula. With Balancer v2, new features have been introduced to reduce gas costs, maximize capital efficiency, enable arbitrage with zero-token starting capital, and offer custom AMMs.


Polaris DEX pools allow traders to swap between assets on the platform, and are defined by smart contracts. What sets Polaris pools apart from other protocols on Aurora, however, is their limitless flexibility, made possible by the Balancer v2 model. Pools with high token counts function much like traditional index funds, providing users with broad exposure to the crypto market. However, Polaris DEX distinguishes itself from traditional index funds by distributing fees to traders who continuously rebalance the pool, rather than charging fees for a broker to do so.

Price Impact & Slippage

Price impact is a measure of how much the price of an asset changes during a swap on Polaris DEX. As prices in Automated Market Makers (AMMs) are directly dependent on token balances, a swap causes a change in the spot price in the pool.

Slippage, on the other hand, refers to the difference in token prices between the time a transaction is created and when it is executed. To ensure that traders get the expected price range, Polaris DEX implements slippage tolerances. Users can adjust the tolerance level in the “slippage settings" according to their preferences.

Liquidity Providers

By depositing assets into the pool, users can earn passive income through Polaris pools. Liquidity providers earn fees whenever swaps are conducted through pools to which they provide liquidity. In addition to trading fees, liquidity providers can earn rewards in the governance token, xPOLAR. To attract further liquidity, Polaris DEX has a flexible Liquidity Mining Program that targets high-priority pools and can respond quickly to changing market conditions.


Polaris DEX fees serve a specific purpose to ensure a healthy ecosystem. Liquidity providers collect swap fees as users trade with pools for which they provide liquidity. This motivates liquidity providers to continue providing liquidity to facilitate trades.

For each transaction, 50% of the fees charged in the Polaris DEX pools go to liquidity providers, while the remaining 50% is accumulated as fees for the protocol treasury, called protocol fees.

Swap Fees: When users make a swap, a portion of the fees collected are used to compensate liquidity providers, with 50% going directly into their pools. This rewards providers for their role in enabling trades and helps grow the pool's overall balance.

Protocol Fees: Polaris DEX also has protocol fees, which are 50% of the swap fees collected by the pools. These fees are used to build up the Treasury Reserves (DAO) and can be utilized or held as deemed appropriate. Initially, the protocol fees can be adjusted by future governance votes. These fees are taken from the existing swap fees, and do not affect the amount collected from traders.


Miro Medium

xPOLAR is an important reward and governance token on Polaris DEX, as well as a component of the vexPOLAR tripool along with SPOLAR and NEAR.

As a reward, xPOLAR is distributed to liquidity providers for staking their LP. Its yield is adjusted over time by vexPOLAR incentives in gauges, ensuring the fair and efficient distribution of rewards.


Polaris Finance

SPOLAR's use case in Phase 2 remains the same, with additional utility being added (governance). It serves as the "minter" of seigniorage assets when demand surpasses the desired peg. However, SPOLAR’s emissions ended on December 15, 2022, it is no longer offered as a reward from liquidity pools. Its total supply is 50,001 tokens. The only way to obtain SPOLAR is through the SPOLAR / xPOLAR / NEAR (vexPOLAR) pool on the open market, which is also used in the locking yield mechanism based on Balancer's veBal. By locking SPOLAR / xPOLAR / NEAR into voting gauges, the supply will decrease, and the price will rise.

Polaris DEX investors were able to participate in an airdrop campaign. Long-term investors were to receive 20% of the 1st year emissions, which is 200,000 xPOLAR. From August 8 until December 1, a snapshot was taken daily. The airdrop was divided into three parts: SPOLAR & SPOLAR / NEAR, Seigniorage LPs & assets (POLAR, ETHERNAL, ORBITAL, USP, BINARIS), and Bonds (PBOND, EBOND, OBOND, USPBOND, BBOND).

To be eligible for an airdrop, you had to meet certain conditions: each asset (staked or held) was accumulating xPOLAR. When an asset is sold, the accumulated xPOLAR for that specific asset is removed and divided among other investors.

The last snapshot was taken on December 1, 2022, and the start of xPOLAR vesting was planned for December 24, 2022. However, it was then postponed to February 17, 2023. The xPOLAR airdrop is linearly vested for 60 days, and as of March 26, 2023, it was 36 days into the vesting period.
Polaris Finance


Polaris DEX protocol development will be centralized until it is fully established and functional, which means the governance is also mainly centralized. However, the Polaris DEX team has plans to move towards more decentralization in the future and involve the community in deciding the protocol's future.

The governance token of Polaris DEX is $xPOLAR. $xPOLAR is used to cast votes on Polaris DEX improvement proposals and as rewards token. The team plans to move all governance to the vexPOLAR token which will be released soon.

Voting on improvements and future development of the Polaris DEX can be done here.

Revenue and Tokenomics


Polaris will distribute 50% of the transaction fees charged for liquidity pools, with the remaining 50% accruing as protocol treasury (protocol fees).

The protocol fees are a percentage of the swap fees collected by the pools during swaps, and they are channeled to the Treasury Reserves (DAO) for use or holding as deemed necessary. Initially, the protocol fees for swaps are set at 50% upon deployment, but these fees can be altered through governance votes at a later date.


The xPOLAR has a total supply of 4 million tokens, which will be released in a phased manner. The release schedule is designed to halve the available supply for release every two years.

The inflation curve for xPOLAR is as follows:

Miro Medium

SPOLAR has a max supply of 50,001. All SPOLAR tokens are in circulation and its emission ended on December 15, 2022.

The Uniqueness of the Protocol

Despite the initial seigniorage not fully meeting expectations, they rebuilt it into a DEX, incorporating the seigniorage concept. The key uniqueness, however, is that Polaris DEX is a fork of Balancer v2. As an Automated Market Maker (AMM), Balancer is a modern form of decentralized exchange, determining the value of each asset based on the ratio of assets shared in a liquidity pool. While offering similar functionality to platforms like Uniswap and TraderJoe, Polaris DEX distinguishes itself with unique features that set it apart from other DEXs. One of its key differentiators is an innovative AMM algorithm that allows for liquidity pools with more than two assets and facilitates trades between them. Pool owners also have greater flexibility and control over liquidity management and trading parameters.

The features offered by Balancer provide great flexibility for both traders and liquidity providers. Weighted pools allow for various pooled assets and trading pairs, reducing impermanent loss. The model can even act as a tailored mutual fund, automatically rebalancing itself and accumulating transaction fees. Stable and metastable pools apply stable math to lower slippages when trading homogenous and correlated tokens.

Moreover, the Aurora ecosystem boasts several successful DEXs using the Uniswap model, such as Trisolaris and Wannaswap, but few have embraced the Balancer model. This means that Polaris DEX not only provides additional choices for traders and investors, but that it also naturally stands out among the crowd.

Development History


  • February 8 - Official launch of the Phase 1 - Tomb Finance fork
  • February 9 - First invite contest with 100 USD’s worth of POLAR split between top three inviters
  • February 17 - Genesis pool started minting POLAR. Exactly 4,000 POLAR were minted, for a total of 24 hours
  • February 18 - The POLAR Genesis pool ended and LPs began
  • March 20 - The next Genesis pool started minting LUNAR, and Polaris Finance reached its highest level of adoption
  • February 18 to December 13 - Polaris Finance experienced significant growth but it also had its fair share of crisis as it added more pegged assets such as LUNAR, TRIPOLAR, ETHERNAL, ORBITAL, USP, and BINARIS. During LUNAR’s peak, the asset's peg was at 2:1 and investors were purchasing it at twice the price. However, the addition of TRIPOLAR was not a favorable move for the protocol. Investors eagerly awaited the ETHERNAL genesis pool, which was also trading at double its peg at one point. However, everything changed when the UST algorithmic stablecoin from the Terra blockchain lost its peg, causing the price of LUNA to drop and eventually be removed from the protocol. As LUNA was Polaris Finance's most traded asset, the failure had a significant impact on the protocol. Moreover, the majority of the treasury was held in UST, which quickly lost its value, reducing the funds available for peg redemptions. As a result, the pegs began to falter, leading to the ongoing Polaris Finance crisis. The protocol was unable to redeem the pegged assets due to insufficient funds, and the addition of several other pegged assets only compounded the issue. The peg crisis continues, and the Polaris team is currently working on a solution
  • December 13 - Phase 2 began and Polaris DEX was officially launched
My experience with Polaris DEX, particularly in Phase 1, was excellent. The protocol functioned flawlessly, and it was unfortunate to have been severely impacted by the Terra blockchain crash, which was not the fault of the Polaris DEX developers. I appreciate the developers' approach, as they spend a lot of time on Discord and always assist me with any issues. I am currently observing Phase 2 and gradually beginning to invest my assets in new pools.

Road Map

  • After the DEX launch, the team's top priority is to complete the vexPOLAR locks and gauges
  • Trad-fi functionality (limit order, stop loss, trailing stop, take profit order) is planned for Q2 2023
  • Perpetual futures are scheduled for Q3 2023
  • Additionally, the platform will continuously add new assets, including seigniorage assets and others
I like the ambition to add trad-fi functionalities and create a Perpetual Futures DEX on the Aurora blockchain. Going forward, this could have a very positive impact on the entire Aurora blockchain and attract new investors and traders who prefer perpetual trading in DeFi instead of CeFi.


Polaris DEX's significance to the Aurora blockchain cannot be overstated, as it was the only platform to build in the Tomb Fork. The introduction of multipegged assets and a diverse selection of cryptocurrencies, to which Polaris DEX's algorithmic tokens were pegged, was appreciated by many investors, particularly during the time when LUNA was experiencing its biggest boom. This caught the attention of many new investors, subsequently bringing even more active participants into the ecosystem. Polaris also had a notable impact on some of the dApps on Aurora, such as the lending protocol, Bastion, and yield aggregator, Vaporwave, as they became involved in various investment strategies. In the ongoing Phase 2, the Polaris DEX team has created a fork of Balancer v2 on Aurora, which is significant in several ways and will add to the Aurora blockchain's overall utility and quality in the long run.


Polaris Finance was co-founded by three friends Rippa, Eprixko, and eYdr1en. In addition to them, the Polaris team consists of several other pseudonymous members.  Despite being a small team, Polaris is highly active in development work, and actively interacts with the community on various social media platforms.

Rippa - CEO, developer

Eprixko - CCO, socials manager

eYdr1en - CTO, main developer

Kayaba - Developer

Slicker - Developer

Guggo - UI designer

CyberStrategy1 - Consultant

Community and Marketing

In Phase 1, Polaris DEX built a large and active community, especially in the Tomb Fork space. Its Discord was full of enthusiastic members who supported the protocol. However, as revenue for investors decreased over time, some members left, leaving only the most loyal members who remain active today. Despite having only 1863 members on Discord, it is impressive to see the high level of activity in the community, which is not common in many DeFi projects with significantly more members. The community continues to grow due in part to the timely and informative responses that new members receive when they ask questions, creating a friendly atmosphere that encourages them to engage further.

Polaris DEX has over 4,000 followers on Twitter, and the team regularly posts updates about protocol, with the community regularly engaging in tweets. However, there is room for improvement in the marketing strategy to attract more investors to the project.

Investors and Partners


Polaris DEX did not have any early investors, and there was no token allocation for any investors in a pre-sale.


Polaris DEX’s partners include Aurora, Allbridge, Multichain, Metapool and Flux Exchange.

Risks and Decentralization


It is crucial to acknowledge that utilizing the protocol entails certain risks. The most substantial of these is the possibility of smart contract vulnerabilities or other security problems, which could lead to financial losses for LP token holders and traders. The other risk is that Polaris DEX assets significantly dip in value and you may never return to the value of your initial investment. Therefore, it is advised that users proceed with caution and conduct their own research before utilizing the protocol, as there is always a chance of potential security concerns or market risks.


At present, the decision-making power regarding the future of Polaris DEX lies primarily in the hands of its Polaris DEX team. However, the team has expressed intentions to move towards greater decentralization and involve the community in shaping the protocol's future. Polaris DEX is built to be permissionless, enabling anyone to deploy a liquidity pool. Additionally, there is no need for users to undergo KYC procedures in order to utilize the platform.

Protocol Security and Audits

Polaris DEX is a fork of Balancer v2, which has undergone extensive security measures to ensure the safety of its users' funds. The development teams have engaged top-tier smart contract auditing firms to identify and fix bugs, while Balancer also offers a bug bounty program via Immunefi to incentivize the responsible disclosure of any vulnerabilities by white-hat hackers. Rewards are distributed based on the level of threat, with critical smart contract vulnerabilities offering a minimum reward of 250 ETH and a maximum reward of 1,000 ETH. As Polaris DEX shares the same codebase as Balancer, it also benefits from these robust security measures.




Polaris contracts have been audited by Obelisk. You can find the full audit report here.

Bug Bounty

Polaris Finance does not have a bug bounty program.

KYC & Company

The team has successfully completed KYC with Ape O’Clock. In case of a rugpull or hack, Ape O’Clock will share the KYC information of the individuals with law enforcement in the city / country where they are located. Additionally, the Polaris team has undergone further KYC by the Aurora team and cryptodaily.io.

Company: Polaris Finance, LLC

Analyst Opinion

Polaris DEX is my preferred project on the Aurora blockchain, thanks to the team of highly skilled developers who have poured their hearts into the project. Nonetheless, one major challenge facing the protocol is its limited deployment on the relatively unknown Aurora blockchain. Expanding to other blockchains would expose the protocol to more DeFi investors, who would then be more likely to notice the developers' hard work. The success of the DEX and the innovations the developers bring will determine if the protocol can restore the pegs from the seigniorage concept in Phase 1. In my opinion, expanding to other blockchains would be a step in the right direction.

What particularly impresses me is the team's resilience, even during times when the project was not going as planned. They remained enthusiastic and committed to their investors, providing helpful and proactive assistance throughout. Finally, I am very interested in the further development of Polaris DEX, and we will keep you informed of any news.

René Užovič


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