Three minutes to understand Pickle's micro-idea for liquidity mining: Make the unanchored stablecoin closer to the anchor price
Editor's Note: This article comes fromBlue Fox Notes (ID: lanhubiji), reprinted by Odaily with authorization.
Editor's Note: This article comes from
Blue Fox Notes (ID: lanhubiji)
, reprinted by Odaily with authorization.
After YAM forked AMPL and adopted the liquidity mining mechanism, a large number of forks and popular mining projects suddenly appeared in the entire DeFi field, and new projects appeared almost every day. The Sushiswap fork Uniswap has pushed this phenomenon to a new level. But most projects are just forks with nothing new, not even the tiniest new thing.
However, with the development of time, there will be more and more micro-innovations in liquidity mining. These projects may not be large-scale projects, but because of their small changes, there may be some new developments in constant iterations.
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What is Pickle Cucumber?
Pickle's goal is simple and focused: to bring unpegged stablecoins (DAI, USDT, USDC, sUSD) closer to their peg prices. Pickle is an experimental protocol. In order to achieve the goal of bringing the stablecoin closer to its anchor price, it adopts the incentives of liquidity mining, treasury and governance methods.
Due to changes in market conditions and the constraints of the stablecoin protocol's own monetary policy, stablecoins often break away from their anchors, and the recent rise of liquidity mining has made this problem even more pronounced.
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Liquidity mining of pickled cucumbers
Currently, PICKLE token rewards can be obtained by providing liquidity for DAI-ETH, USDC-ETH, USDT-ETH, and sUSD-ETH on Uniswap.
The current Pickle distribution plan is that each block allocates 1 PICKLE token, and there are five pools to share PICKLE tokens, of which four stablecoin/ETH pools get 50% of them, and the remaining 50% is allocated to PICKLR/ ETH token pool (because this pool takes the highest risk). When it was first released, there was a 10-fold multiplier effect in the first two weeks, that is, each block can be allocated 10 PICKLEs in the first two weeks. After two weeks, it will return to normal, that is, return to the allocation mode of 1 block and 1 PICKLE.
Unlike other projects, liquidity mining is only used to guide liquidity. Pickle is also trying to push the stablecoin closer to its anchor price by adjusting the rewards of different stablecoin pools. Its main principle is that miners are a group that pursues high returns. By allocating different reward shares in different mining pools, they form selling pressure on stablecoins that are higher than the anchor, and form buying pressure on stablecoins that are lower than the anchor. This pushes the stablecoin closer to its target anchor price.
However, from an operational point of view, if users operate back and forth between different stablecoin mining pools, it will be very complicated and not cheap, because operations such as exit, exchange, and join are involved. In order to make it easier for users to switch between different mining pools, Pickle plans to launch PickleSwap, where users can switch their LP tokens from one stablecoin pool to another with one click.
Treasury (pVault)
It is not enough to exert an influence on the stablecoin price only through the adjustment of liquidity mining incentives. The second method of Pickle is to take the initiative. This is also the original intention for it to set up a treasury (pVault).
At launch, there are two strategies. First, Pickle allows liquidity providers to deposit sCRV to earn CRV tokens, and then sell CRV tokens to provide a minimum amount of stablecoins to earn additional sCRV. Second, use the flash loan method to achieve arbitrage between different stablecoins.
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Governance and Developer Fund
PICKLE tokens are used for governance. The monetary policy of the system is iteratively adjusted by the holders of PICKLE tokens. Holders of PICKLE tokens can vote to govern the protocol. At the same time, Pickle also plans to introduce the quadratic voting model that V God has been paying attention to in order to achieve better governance.
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Liquidity mining and the formation of the DeFi pattern
At present, the high-yield stimulus funds of liquidity mining are swimming back and forth between different protocols. Due to the different incentive mechanisms of each mining project, liquidity flows back and forth between different DEXs. The most obvious impact is Uniswap. Before Sushiwap started liquidity mining, Uniswap had about $500 million in liquidity. With the development of Sushiwap’s liquidity mining, Uniswap once touched $1.5 billion in liquidity, but as Sushiwap pried away its liquidity, it It was later reduced to $500 million. It seems that Uniswap was hit hard, but later various swaps still locked their liquidity mining on Uniswap, so that the liquidity of Uniswap was pushed up again.
