Stablecoin Pairs / SEFI Rewards

I am attempting to bump this topic and get community feedback on adding more / aggressive SEFI rewards to stablecoin pairs, including cross chain pairs.

  • USDT (ERC20) / USDT (BSC)
  • USDT (ERC20) / BUSD (BSC)
  • USDC (ERC20) / USDT (ERC20)
  • UST (Terra) / USDT (ERC20) *once bridge goes live

As overall market is in crab / bear / unknown , more and more people are looking to go risk off. Secret provides a great way with low fees to LP, stake, claim rewards, shift to new pools. This also lets users enter via one bridge and exit via another with even more anonymity cross chain. (this can only be done if there is enough liquidity)

Polygon in particular has benefitted a lot from Stablecoin LPs that bring in liquiidty to to their layer.

People are aggressively looking for risk off stablecoin LPs, generally speaking rates for lower risk stable coin pairs are 10-30% APR, which SEFI could likely compete with.

(high degen / algo / ponzi stables offer more but people are becoming more and more skeptical with the amount of rug pulls, bank runs - see MALT, IRON FINANCE, SAFEDOLLAR)

I would love to see at least one or two pools get enacted with SEFI rewards prior to SEFI governance to start capitalizing on liquidity as soon as possible.

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Worth noting: the idea here is to improve TVL, volume, cross chain privacy and attract liquidity.

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I’m fine adding all these coins pairs with SEFI for rewards. Any cross stablecoin (or chain in general) can route through SEFI. This is the way. No risk-free return, dump SEFI.

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I agree adding more stablecoin pairs seems the way to go given market conditions.

Stablecoin farms are a good idea given some folks are doing it on ETH and BSC-based networks. The yield they generate, perhaps they will want to move that from the bridges into SCRT stable pools.

This might be a temporary fix, but it will take away from other pairs (naturally).

We need to come up with better more innovative ideas. Specifically, we’re thinking of ways to allow double-dipping (enjoying rewards in Secret but also on remote chains at the same time).

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We need a Curve like product on Secret Network that’s designed to trade stable coins or primarily cross-chain assets with minimal slippage (like sETH - sETH(BSC)). In the meantime, I think there’s value to add rewards for sUSDT - sUSDT(BSC), both as a way to increase TVL and enable cross-chain arb. opportunities

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I think this is a good idea because:

  • Easy to see that crosschain stablecoin liquidity is very important for a privacy centric chain. This might even be a primary use case for Secret for some time…
  • Market conditions as mentioned.
  • Even if SEFI dumps initially, if this drives adoption, this would just give some of us (the bulls) more opportunities to buy cheap sefi for the future.

Some suggestions:

  • If we are interested in decentralizing stable coins, I suggest we reduce the number of pools that would use USDT. I see no DAI above. I think switching USDT (ERC20) / BUSD (BSC) pool into USDC (ERC20) / BUSD (BSC) should do, since we already want USDC (ERC20) / USDT (ERC20)

  • I might be biased since I don’t want to hold Tether, instead I like DAI BUSD and USDC

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They should be SEFI pairs otherwise y’all getting dumped on

So I’m not sure what the best resolution to the problem of low stablecoin liquidity is but I tend to think that stable-stable swaps should be handled by a curve-style AMM. @assafmo has already done work on this and I think it should clearly be invested in further. My own opinion is that the SecretStablePools should be under the umbrella of sefi also but should just be a separate app; though that’s obviously not up to me at all and Assaf may well feel differently (which is completely fair)

Edit:
Twitter link to Assaf’s announcement of his work – https://twitter.com/assafmo/status/1411405597275217929

I also think that SecretStablePools is really important for defi on Secret because we are kind of shaping up to be a place where lots of assets are bridged from different chains which naturally leads to pseudo-equivalent assets coming from different chains but varying only in “chain/bridge risk” if that makes sense.

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Having spent the last month thinking/discussing/researching this, I tend to agree we need to focus on stablecoin pairs, but with a twist.

As I mentioned above, simply shifting SEFI rewards from non-stable to stable pools is a short term fix. The proper solution seems to be to shift SOME rewards to stablecoin pools (either on SecretSwap or later on - on a more capital-efficient Curve-like AMM), while re-investing the bridged liquidity locked in other networks, and using that to buy SEFI and pay it out as extra rewards. This ‘double-dip’ mechanism should get us to truly remarkable APYs (with reasonable risk) and provide buy pressure to SEFI.

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When you speak about the bridged liquidity locked on other networks you mean here (𝕊ecret Bridge)? Would all TVL locked on the bridge regardless of its participation in the AMM be used?

This is a very interesting idea but we’d obviously have to make sure that it’s extremely low risk investment. Pretty much only blue chip defi. But this does have a lot of merit; bridged snx could be put in the yfi vault, bridged eth could be put any number of very safe places… But I do worry about how these allocations are decided on. Is there any way to make participation in the extra yield boost (and associated risk) voluntary so that someone can bridge without being exposed to this extra risk (that is, the platform risk of wherever the yield is being generated from)?

I don’t think that’s possible. When you bridge over the coins are pooled in the same location and become fungible with one another. This is where the privacy comes from. I don’t imagine there’s a way to track which coin in this pool belongs to which privacy coin being traded throughout the SCRT ecosystem. Even if you tied to a specific wallet address they could move it. The risks are socialized.

What concerns me about this is that many people entered bitcoin and crypto over the idea of banks misusing deposits of consumers. People would say that when you deposit money into the bank they’re using it for their own benefit with risks, you should bank yourself. This is rebuilding that without consent. What’s a bit more concerning is that Sienna (and hopefully others in the future) will have the bridge UI on their sites. Unbeknownst to them all bridged assets will go to support a competitor. I think it’s a breach of trust to add extra risk into the bridges.

Ya, on second thought it’s not sounding like a great idea. I don’t see how we could firewall the risks and it’s clearly not something that everyone would want done with their bridged funds.