Launch an ERC20 Bitcoin - Stablecoin Pool for more fees!

Hi everybody! I’m DeFi Sushi. Some of us are already friends on Twitter! This proposal is for an ERC20 Bitcoin - Stablecoin pool, such as a WBTC-USDC pairing, or renBTC-DAI pairing.

The goal is to incentivize BTC/USD liquidity, to make BTC/USD swaps more efficient, and become the best DEX on Ethereum for Bitcoin-Stablecoin swaps.

Motivation
My motivation for proposing this is because I am thinking of taking profit on my BTC and switching back to stables. I speak purely from a user perspective.

However, I am not a very good trader, and my experience with AMMs is that they’ve been good at stacking stacks on my behalf! my assets in the YFI-ETH and CRV-ETH pools have absolutely outperformed anything I would be capable of if I had been trading spot on my own.

So… Why not have an ERC 20 Bitcoin - Stablecoin pool, such as WBTC-USDC, that automatically takes profit on BTC for me on the way up, while buying dips on the way down? And on top of that, earn sushi too?

The Problem
Currently there are very few BTC-Stablecoin pools that are incentivized. Uniswap has $20m in WBTC-USDC liquidity, but that has no incentives other than 0.3% swap fees. WBTC-USDT and WBTC-DAI liquidity sucks. Don’t even think about sBTC or renBTC.

On DEXes, trades tend to be routed thru 2 pools. For example, SushiSwap has pools for WBTC-ETH, and ETH-USDT. PancakeSwap has pools for BTCB-BNB, and BNB-BUSD. Swaps between BTC and stables therefore go thru WBTC > ETH > USDC, or BTCB > BNB > BUSD, instead of directly between bitcoin and dollars themselves.

The fact that Uniswap’s 4 UNI incentivized pools (their retaliation in the later part of 2020, against the SushiSwap vampire) were WBTC-ETH, ETH-USDT, ETH-USDC, and ETH-DAI, indicate to me there’s a need to fulfil the WBTC-Stablecoin demand in the market, because those are the pools that have the more reliable volume.

At $60,000 per bitcoin in recent times, many people are probably thinking of taking profit. (Tesla certainly felt so!) So therefore, if SushiSwap could be that perfect venue for retail farmers to take profit on BTC, we’d attract some nice TVL. At $70k, $80k BTC, we wanna have the infrastructure prepared beforehand!

My speculation is also that the WBTC-USDC pool would drive more trading volume than most onsen pairs. Don’t you think xsushi holders would be happy?

For
My perspective is that of a user. I want this pool because I love earning sushi, but it also serves a practical purpose. By taking profit on my BTC back to stablecoins, and then contributing this liquidity to the pool, I am cutting my volatility on my BTC positions in half, and stacking on the way down.

Against
I am not sure if this pool is useful for SushiSwap, as an optimized route to trade this pair. It may be the case that WBTC > ETH > USDC is still a better path. I’ve spoken with Maki and Keno on this, and they’ve encouraged me to propose this in the forum to see what everyone thinks.

Poll

  • It’s an idea worth a shot! Build it!
  • It’s poor, ETH pairs are good enough

0 voters

1 Like

I think this is worth a shot, although not at the risk of diluting attention away from current sushi projects.
An analysis of the value capture would be valuable here, to help prioritize the effort, if accepted.