Hello everyone! The Strudel team has been researching new ways to deploy vBTC in order to incentivize and maintain the peg. One of the solutions we have researched using is Curve Finance (CRV), a project long on the forefront of stablecoins and stablecoin utility. CRV has created a pool factory deployment that was front ended by the Yearn team at crv.finance
We have already been following this product for some time but finally, we have managed to seed the liquidity on a v2 pool. The pools are called Metapools, which means that we are pairing vBTC with the 3CRV Bitcoin LP. This gives the user the ability to swap vBTC for any of the underlying Bitcoins in the CRV pool and therefore reduce slippage. Additionally, the CRV protocol offers an amplifier that reduces slippage on stablecoin swaps, similar to the effect we are looking for with Uniswap v3.
Users can now add liquidity to earn fees or swap vBTC on this pool (use small orders). Another arbitrage opportunity has been created since at the moment vBTC is more expensive in this pool than Uniswap. We will be testing this pool for some days as we consider adding a TRDL incentive in order to improve liquidity.
We are excited about the possibility of having bigger players leverage this pool in a vault-type strategy that could generate enough passive buying activity to provide another way to help sustain the peg long-term. We hope to get your feedback on this solution and have a conversation about how the yield incentives could be rearranged.