Pickle — An experimental protocol to bring stablecoins closer to their pegs using farming incentives, vaults, and governance
📖 Abstract
The Pickle protocol uses farming incentives, vaults, and governance to bring stablecoins closer to their pegs. By distributing PICKLEs to Uniswap LPs of different stablecoin pools, capital movement between stablecoins is encouraged. pVaults, short for Pickle Vaults, will utilize different active strategies including leveraged flash loans to short off-peg stablecoins, to generate returns for pVault owners and the protocol. PICKLE is also used for governance to control the monetary policy of the system.
❗Motivation
Stablecoins have often gone off peg due to varying market conditions and limitations in monetary policy. The recent boom in yield farming has only exacerbated this problem as farmers buy and sell large amounts of stablecoins in order to chase the best yield.
For the DeFi ecosystem to flourish, a much more stable stablecoin ecosystem is required
💡 Solution
🧑🌾 Elastic Farming Incentivization
The Pickle protocol empowers farmers to leverage their yield-seeking tendencies to help the DeFi ecosystem maintain the pegs of the four largest stablecoins: DAI, USDC, USDT, and sUSD.
The idea is simple, PICKLEs are minted and distributed to Uniswap LPs of the following pools:
- DAI-ETH
- USDC-ETH
- USDT-ETH
- sUSD-ETH
When a stablecoin is above peg, the protocol will distribute fewer PICKLEs to that pool and more PICKLEs to other pools. As farmers chase the best yield, this creates sell pressure for the overvalued stablecoin and buy pressure for the other coins. This works in reverse for stablecoins that are below peg.
Initial distribution of PICKLEs is based off Curve.fi’s sUSD pool.
Future distributions will be done via a timelock contract, with input from the governance community.
🔄 Pickle Swap
We’ve made it dead simple to chase the highest yield between the pools. Using our “Pickle Swap” feature, you can change your LP position from one stablecoin pool to another in a single click. The ease of swapping will help off-peg stablecoins return to their peg faster.
🏦 pVaults
We realize passive PICKLE incentivisation can only take us so far. In a few weeks after launch, we will introduce pVaults which uses an active strategy to bring off-peg stablecoin back to peg.
There are 2 vault strategies at launch. The first is allowing LPs to deposit sCRV to earn CRV tokens, and then selling the CRV tokens for the least supplied stablecoin to earn additional sCRV. The second strategy will use flash loans to leverage up and arbitrage between stablecoin while generating return for the vault owners. There will be a separate blog post on the mechanisms of pVaults in the future.
🌐 Governance
PICKLE holders have the power to shape the future of the protocol. A dedicated on-chain governance forum will be live a few days after the protocol launch to enable decentralized community control . The governance process works by having users vote with their PICKLEs. In the short future, we plan to introduce quadratic voting for a more democratic form of governance.
👩💻 Sustainability (Dev Fund)
2% of each PICKLE distribution will be set aside for future development and iterations while giving an opportunity for the team to work full time on the project. Beyond security audits, the team would like to contract out an analysis of a more equitable inflation schedule and the building of a more comprehensive governance portal among other UI/UX improvements.
🥒 Token
Distribution schedule
🚨 UPDATE [2020–11–15]: Due to a governance vote, we will now implement a halving schedule for the first month, and then distribute 1 PICKLE per block thereafter (subject to further governance).
— — Original text:
1 PICKLE is distributed per block across the four stablecoin/ETH pools and the PICKLE/ETH pool. 50% of the reward is dedicated to the PICKLE/ETH pool, while the other four stablecoin/ETH pools share the remaining 50%.
At launch, there will be a 10x multiplier to reward early adopters of the Pickle Protocol, meaning 10 PICKLEs are distributed per block for two weeks.
The Pickle Protocol will adopt a fair incentive distribution, meaning no VCs, no pre-mine, no ICO, and staking prior to reward distribution .
PICKLE distribution will start on block 10838600, around September 11 2020 5AM UTC.
💾 Technical Details
Token Address: 0x429881672B9AE42b8EbA0E26cD9C73711b891Ca5
Github: https://github.com/pickle-finance/contracts
Hosted Front-End: https://pickle.finance
🚨 Disclaimer
Contributors to Pickle have made reasonable efforts at ensuring the integrity of the protocol including tests. Pickle is completely valueless and has 0 financial value. Anyone who chooses to engage with these contracts, including the Pickle token contract and the staking contracts, are doing so at their own risk. You should perform your own due diligence.
💬 Join Us
You can start depositing LP tokens to the Pickle contract using the interface at https://pickle.finance
Join discussion in our Discord at: https://discord.com/invite/gR85hmC
Don’t miss any update by following our Twitter at: @picklefinance
