Strudel’s Mare Imbrium Fund: The Guide
Strudel Finance now has an indexed Balancer pool for all their ecosystem’s liquidity, but what IS a Balancer pool?
Balancer is an automated portfolio manager, liquidity provider, and price sensor. Balancer pools turn the concept of an index fund on its head. Instead of paying fees to portfolio managers to rebalance your portfolio, you collect fees from traders, who rebalance the fund by following arbitrage opportunities.
Balancer V2 brings powerful new features to slash gas costs, super-charge capital efficiency, unlock arbitrage with zero-token starting capital, and open the door to custom AMMs.
Furthermore, instead of having fixed pool parameters, Balancer pools allow for variable pool parameters that allow for adjustment of the fund tokens, token weights, swap fees, LP limits, max deposited value limits, and a start/stop trading feature. These numerous adjustable parameters allow fund managers the flexibility to leverage different combinations to suit the pool’s needs.
Balancer is based on an N-dimensional invariant surface which is a generalization of the constant product formula described by Vitalik Buterin and proven viable by the popular Uniswap dApp. Technical details can be viewed in the whitepaper linked below.
More Balancer information:
What is the Mare Imbrium Fund?
The Mare Imbrium Fund is a Balancer smart pool with six assets weighted at 16.67% each. This fund includes three Strudel assets, the deflationary TWA token, ETH, and a stablecoin. The assets in the Mare Fund (with main liquidity sources linked) are as follows:
- Strudel Token (TRDL): The Strudel governance token
- Strudel Bitcoin (vBTC): Wrapped BTC on Ethereum
- Strudel Bitcoin Cash (vBCH): Wrapped BCH on Ethereum
- TWA/ETH LP token — The Adventure Token (deflationary, shows up in the Mare Fund as UNI-V2
- OneVBTC — Ichi stablecoin pegged to the dollar and collateralized by USDC and vBTC
- wETH — Wrapped Ether
Note: Since TWA/ETH LP tokens are one of the six assets in the Mare Fund, you could also say that ETH makes up 25% of the index and TWA makes up 8.34%.
The Mare Imbrium Fund is a highly undervalued and low-risk index fund that gives exposure to the Strudel ecosystem while also being supported with ETH, a stablecoin, and the deflationary TWA token. Investment of one asset (single-sided liquidity) provides demand for the other five tokens through arbitrage rebalancing inherent in these types of smart pools.
How does the Mare Fund support the ecosystem and the vBTC/vBCH peg?
Let’s look at a simplified example to see how vBTC is supported by the Mare Fund…
The Mare Fund always needs to have 16.67% worth of vBTC. As more people join and put other assets into the pool (TRDL, for example), the Mare Fund needs MORE vBTC to fill the 16.67% weight, as the TRDL deposit lowers the weight of the other 5 assets, causing a positive delta (change) in price on Balancer and an arbitrage opportunity. Now, stay with me here, the ONLY place arbitrage traders and bots can acquire vBTC is via the ETH/vBTC pool on Uniswap (the main source of liquidity) meaning arbitrage traders/bots will buy vBTC on Uniswap and sell it at a higher price on Balancer. This feeds the Mare Fund with vBTC, balances the weights, and the arbitrage ceases. The net takeaway of these arbitrage trades is that there exists a constant source of buy pressure on Uniswap (the price oracle) for vBTC as the other 5 assets are deposited to the Mare Fund.
To add incentive to join the Mare Fund (which is attractive in its own right), a Strudel Token (TRDL) incentive has been added for Mare tokens deposited in the Mare farm on the Strudel dApp. Once Mare tokens are acquired and deposited, a substantial yield of TRDL (40% of TRDL rewards currently. 50% after Phase 2.0 is implemented) are distributed to Mare LP stakers. The current APR is ~300% despite the low price of TRDL at the time of writing. To paint a picture looking forward, a 2x price increase in TRDL price will increase this APR to ~500% (likely a little less as Mare acquires more liquidity providers). This should immediately illuminate the potential liquidity mining rewards by staking Mare tokens going forward.
To provide a way for free-floating TRDL to support its own ecosystem and the peg has long been a goal of ours at Strudel. We are confident that the Mare Fund is the answer. All harvested TRDL, whether it be from the Mare Fund, vBTC-ETH, vBCH-ETH, or TRDL-ETH farms, can and should be compounded into the Mare Fund. This strategy is a win for everybody, stakers, holders of Strudel assets, and traders.
- The farmer (staker) deposits TRDL to Mare, gets more Mare tokens, adds those tokens to the Mare farm which yields a higher farm rate. This strategic cycle allows farmers to continually compound harvests at a higher and higher rate while inherently supporting the Strudel ecosystem and the vBTC/vBCH pegs, which adds more value to the ecosystem, and so on.
- Mare Fund assets acquire a positive price delta that gives arbitrage traders/bots incentive to buy vBTC/vBCH on Uniswap and sell them into the Mare Fund which balances the weights. This action drives the price of vBTC and vBCH towards peg, people start bridging more BTC and BCH to Ethereum, and the Strudel engine is firing on all cylinders once again. It’s a self-supporting and virtuous cycle. Every asset deposited to the Mare Fund is more fuel to the Strudel fire, and it will be a main driving force for our ecosystem going forward.
- Arbitrage traders/bots feast on price deltas. The more arbitrage opportunities = the more volume the Mare Fund receives = the more sustainable and self-supporting the Mare Fund becomes. Deposit assets into the Mare Fund, make a high return, and support the Strudel ecosystem’s sustainability. It’s that simple.
The vBTC and vBCH peg (and others, going forward) is of utmost importance to the growth of the Strudel ecosystem. We understand that. The Mare Fund has been constructed as a clever solution to achieving and maintaining the peg. Not only is achieving the peg in sight, as the Mare Fund grows, liquidity deepens and it will become more and more difficult to take vBTC and vBCH OFF peg. It’s all systems go at that point. This is exactly what we mean when we say that we use market dynamics and crypto-economic incentives to support the peg and remain scalable. This is a completely trustless and unique solution to bridging BTC and BCH to Ethereum, and with your help and further developments (we don’t stop), there’s no end in sight.
Are there any risks involved with the Mare Ibrium Fund?
We’re still discovering different aspects of the Mare Fund, and liquidity pools often tend to at least have a risk of impermanent loss (IL). With the Mare Fund, however, because it’s an auto-balancing pool, you are less likely to experience IL since its value is derived from multiple assets. This essentially means that to lose significant value on your staked MARE tokens, all of the underlying assets would need to lose significant value. Having a stable coin (oneVBTC) and ETH (in wETH form) as a part of the fund offsets a lot of potential downside risk. Also, another of the six assets, the TWA-ETH LP token, provides increased ETH exposure while also giving exposure to a deflationary asset (TWA) that will provide a steady price boost over time.
At current prices, after the recent market tank job, the actual price risk of joining the Mare Fund is low, and it has substantial upside. At the time of writing (6/24/2021), here are the token and index token prices:
- TRDL — $0.21 (ATH ~ $14)
- vBTC — $8790 (4x from peg)
- vBCH — $287 (2x from peg)
- TWA — $0.07 (ATH ~ $0.57)
- ETH — $2011 (ATH ~ $4384)
- oneVBTC — $0.96 (pegged to the dollar)
- Mare Fund LP token — $129 (Brand new fund, was trading above $250 last week))
As you can see, every asset in the Mare Fund has taken a substantial hit in price recently due to microcap conditions, and vBTC and vBCH have been taken off peg, but they always gravitate back, especially with our expected growth stage. Furthermore, yearly lows have provided substantial support near these current prices and market conditions are currently becoming more favorable for microcaps. As Mare grows, Strudel grows, and every asset has extreme upside. That all being said, the reward/risk ratio (Also called the R-value) of an investment in the Mare Fund at this point is high, to say the least.
What are the upsides to the MI Fund? What can we do with it?
Besides holding a low risk/high reward index token, staking Mare tokens on Strudel’s Terra-Farms is the best option to increase your upside potential at this point, but we have Polygon in our sights for Mare tokens as well. The current APR of staking Mare tokens for TRDL rewards is approximately 300%. Once harvested, users can compound their TRDL tokens back into the Mare Fund. This action supports the peg, supports the ecosystem, helps put more Mare tokens in pockets, and drives up the value of all Strudel assets and the Mare Fund itself.
Since the underlying assets are undervalued currently, getting into the Mare Fund likely has significant upside with little downside risk. The Mare token (which represents the pool index) gets its value from a 16.67% split across all Strudel assets and others chosen for their utility in an index fund. OneVBTC is a stable coin, wETH is the gold standard, and the TWA-ETH LP token is relatively involatile but also deflationary. That leaves vBTC and vBCH which are off peg and destined to return, and TRDL which is extremely oversold from past market conditions and has begun its rebound. If some or all of the Mare assets succeed together, the underlying price of the Mare LP tokens will rise significantly, even while rebalancing on the way up. In fact, gains of price in one token essentially “lock in” gains by increasing the size of the other 5 assets in the fund. The Mare Fund does all the heavy lifting and that’s what makes Balancer index funds so attractive.
Why isn’t the Mare Fund APR showing up on the Strudel dApp?
The simple answer is that it is a complicated percentage due to the variation in price of the six underlying assets. Mare is constantly rebalancing hence the difficulty. The hotfix we have for now is the spreadsheet calculator. This will require you to do some timing and calculating on your own, but will in essence show how many TRDL per day/month/year you’re baking, and will use that number, multiply it by a current price of $TRDL and with some simple math around how much your original staking was worth, you’ll arrive at an approximate APY. We realize the inconvenience of this and are working on an APR calculation display on the Strudel dApp. The current APR is approximately 300% (as of 6/24/2021) but if in doubt, please shoot an admin a DM or ask in the official Strudel Telegram group. We have a lot of nerds to help you out.
Will we be able to stake the Mare LP token anywhere else in the future?
Yes, there will be many opportunities to use the Mare LP tokens elsewhere. We’ll be looking to integrate the Mare LP tokens both with other Nerd Finance products and as well as with our partners both on Ethereum mainnet and in other chains. As mentioned above, a little bird told me a little something something about Mare tokens on Polygon. Patience is warranted, however. The main developmental focus at the time of writing is implementing Phase 2.0 of our Strudel Liquidity Incentive Revision. This revision will actually increase available TRDL rewards for Mare staking to 50% from the current 40%. Even more reason to take a look now…
How much liquidity do we want to see locked in this pool in the short/medium/long term?
One of our main priorities is to reach $1 million in the Mare Fund in the next 2 or 3 months. We currently sit at $143k in a matter of weeks, in a down market, so, with increased exposure and a continuation of current favorable market conditions, this goal should be easily attainable. More liquidity will help immensely on the road back to the vBTC/vBCH peg and will start producing much more volume to the fund. We have had $10 million pools on this protocol before and I don’t see why we shouldn’t get back there with the immense utility of the Mare Fund, improved design (front-end), and increased exposure.
Is there any risk with the Mare Fund essentially keeping the token prices constant? If they are always rebalancing, how will $TRDL increase in price? How will vBTC get back to the peg? How does this work?
The Mare Fund connects the liquidity for TRDL with our bridged assets. To create arbitrage there needs to be a difference between prices in two venues (delta). What we are doing with the Balancer pool is to generate a constant delta that can be arbed among our protocol assets. Whenever more TRDL is added to the Mare Fund, there’s a demand for more of the rest of the assets within the pool that is covered among many trades. Arbitrage of TRDL-ETH creates a delta between TRDL-VBTC that requires a VBTC-ETH arbitrage which creates another delta and so on.
The total risk of holding the Mare LP is equal to the average drawdown for each of the Mare Fund’s assets. Since we have decided to use a functional stablecoin, from the blow of the whistle holding MARE is 16.67% safer than holding naked TRDL because some of the value is held in a stablecoin pegged to the dollar. It has been proven that, on average, Mare LP token holders/stakers will outperform those holding the individual assets over a longer timeframe. Risk is lessened, gains are essentially locked in for you, and you receive a substantial passive income by staking. These factors combine to make for a financially responsible and comforting long-term hold, a necessity in every portfolio.
The Mare Fund is an effective way to bring stability to Strudel’s entire ecosystem. Our research has shown us that investors have been longing for this kind of ecosystem; an ecosystem that can trustlessly bridge centralized assets such as BTC and BCH to Ethereum and other blockchains, eliminate counter-party risk, provide substantial passive income opportunities, have substantial growth upside, and is operated by an open, communicative team that is dedicated to making it work. We have a long growth period ahead of us and the Mare Fund is a key element. If you’ve had losses this market cycle, or even if you haven’t, consider joining Strudel’s Mare Imbrium Fund here for a high-upside, low-risk, self-supporting index fund. You can deposit any of the tokens listed, and if you’re new to Strudel, you can easily use wETH to deposit to the same effect.
How to acquire and stake Mare Imbrium Fund LP tokens
Note: Written instructions below. Video tutorial available here.
- Go to the Mare Imbrium Fund Balancer pool
- Connect your wallet (Ethereum Mainnet)
- Click Add Liquidity
- Click Single Asset
- If connected properly, your balances of the Mare Fund assets should appear. You can only add liquidity one asset at a time (we’re exploring multi-asset adds). Type in the deposit amount of your desired deposit asset.
- The slippage and number of Mare tokens you will receive for that deposit amount will be displayed.
- If you haven’t done this already, click Setup proxy. This is a one-time proxy build that everyone must do to join Balancer pools. It will last for the life of your associated wallet. Confirm transaction in your wallet.
- Click Add Liquidity. Confirm transaction. Once the tx has been completed, you are now the proud owner of Mare Fund LP tokens.
- To stake your Mare LP tokens, visit the Mare farm on Strudel’s Terra-farms
- Connect your wallet (Ethereum Mainnet)
- Click Approve (basic token approval transaction)
- Once approved, click the + icon
- Type in the number of Mare tokens you want to deposit (or click Max)
- Click Confirm. Confirm transaction in your wallet.
- Done! You should now see TRDL accruing in your farm.
- When you want to harvest, click Harvest. Confirm transaction in your wallet. Now you have TRDL.
- Go back to step 5. That’s compounding, baby.
Thank you, intrepid reader, for making it through this guide. You have dedication and fortitude. If you still have any questions, comments, or concerns, please reach out to a team member in our official Strudel Telegram group or send a message to the official Twitter account.
And now, after all that, we leave you with the Mare Imbrium theme song. Enjoy!
– Dudeness, Ataxia, and Mattim0use