Added utility to Pickle / Some strategy ideas

Hello everyone, a few of us in discord were discussing ideas to boost Pickle’s value and utility. These ideas are not all my own but a conglomerate of ideas that I wanted to post on the forum for formal discussion. Some of us were discussing ways to further leverage Pickle staking to boost APY while minimizing risk to the treasury. A few ideas include the following :

  1. Offering pickle stakers the option but not the obligation to borrow against their pickles for stable-coins to buy more pickle.

  2. Create a matching engine for participants interested in naked staking. The idea is to allow participant a to single stake asset x. participant b (the pickle staker) would have the option but not the obligation to match this request with an equivalent amount of pickles to add to the pool. Pickle stakers could earn a higher portion of the rewards for assuming more risk and fees incurred could go to the treasury. Single side stakers could earn a smaller, stable return as part of the pool split.

  3. Lending out the LP tokens themselves so participants can zap into a pool at a premium.

  4. Using data analytics to make markets for predicting interest rates. Not necessarily arbitrage but making a market that bets on the future interest rates across different lending protocols.

Feel free to critique or add. Just thought I would present these ideas in the forum for discussion.

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I really like the idea of getting our staked pickles to work somehow, whether that’s by being used 50% in liquidity pools with the other 50% ether coming from another source or the idea that we can use our pickles as leverage to take out stale coin loans as @yyctrader suggested

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@Scotty always coming with the heat. @yyctrader Also mentioned having the treasury take the other side of the trade for the lp matching and pocketing the spread.

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@yyctrader may be able to formalize this more clearly. I just figured I’d get the convo started. He/She brought up a lot of good ideas.

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some ideas i bashed out talking to myself on discord lol:

the thing is, longterm we won’t need to think about the pooling of liquidity because pickles will be established enough that people don’t need crazy interest on their pickles anyways, it is natural to slowly drop off the percentage the pool gets as the project introduces new strats in pjars etc
those complaining about their lower rates are just pickle farmers who want to dump rather than see it as a longterm hold or see the project as the DAO many of us see it as
that is my two pennies anyway

lets say i staked 100 pickles, and ted staked 2468 DAI - his dai would be traded for eth and pooled with my 100 pickles - we both get some pickles, he would get a higher interest than he would get in any other protocol and i would get a higher % than i am currently getting staking my pickles for governance as the system currently stands but not the 200% currently on offer in eth power - 50% lets say
obviously the problem is that if pickles or ether is at a lower price than when teds dai was used to buy them when he wants to withdraw

that’s something we need to figure out
it would probably fall on the pickle holder to pay up the difference
it is a high risk/high reward scenario and more aimed at longterm holders
it would enable a much fairer distribution of pickle rewards as those supplying the liquidity are the longterm believers in pickle and want the highest exposure to pickle
right now i am not supplying pickle in pool2 because purely in selfish terms it makes no sense for me as i believe pickle will outperform ether in the same period, and i hold no ether as of this time
i guess there are others like me who would be willing to supply vast amounts of pickle into some liquidity pool which basically bets that pickle will succeed

it is obviously high risk as most of the pickles may need to be liquidated to pay back the folks who weren’t taking as much risk =p
but then the question is, whether people would supply eth for 10 - 25% APY and take that risk exposure - and if they are long-term on term eth it shouldn’t matter - if the pool loses its initial weight we can just sell the necessary amount of pickles to give liquidity to buy the exact amount of ether (not usd value) that person or vice-versa - and because the pickle supplier has basically bet on picking increasing during that lockup period, 1 month, 3 months, 6 months, a year - whatever it is… they would take the loss if there is one

I’m wondering if offering insurance cover would be one way to mitigate this risk. Or another idea to throw out. What if an LP wanted to offer eth to the pool?

pickle stakers could use their position as collateral to borrow stables to match the other side of the liquidity pool. this gets thrown into the pJAR and the LP tokens into the farm. we let the eth staker earn the rewards from the pJAR based on their balance. this way they don’t lose principle if I understand correctly. But pickle stakers could also earn the other side of the cut for providing the other 50% liquidity. so if yield is 20% for eth/dai and participant offers $1,000 worth, we match with $1,000 in DAI. each side earns their portion of the yield. then, those LP tokens can be farmed for pickle. when farming for pickle, the pickle staker who borrowed against the position to provide stable coins should earn the bulk of the pickle rewards. maybe a 90/10 split or 80/20 split.

Pickle rewards and pjar rewards are then distributed after a given period of time. To take a step further, say someone just wants to zap right into a pool using LP tokens. You could either charge a premium for doing so or lend them out using their stable coins as collateral. This would allow them to double dip, but we could charge a flat fee or set interest for the right to use the lp tokens. When they decide to unstake, they pay back the lp tokens if they are borrowed. Or if bought outright can be used to stack in other ways.

idk. I’m getting tired and kinda delirious at this point lol

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Introducing the Pickle Monetization Initiative (PMI)

Concept: Allow Pickle stakers to borrow up to 50% of their staked pickle value in stablecoins with APR based on collateralization ratio
Rationale : Monetization of an idle asset + more fees for the staking pool

The way I see it, we have some folks who want a stable return, some who want to farm pickles with staking rewards, and some who just want their pickles to earn more pickles…this way users have flexibility to do as they please with the borrowed stables + a single albeit more complicated solution for the devs

We must incentivize stakers to stay in spite of falling APYs, and this is one method to do that.

I suggest we keep any potential lending in-house for now with a hard cap, say $500k to start with as a pilot project…that’s 1.5m in locked pickles that’s going nowhere soon (assuming average 3:1 collateralization)

I thought about this some more this morning, and we may have to wait a while before thinking
about implementing this because we need a source for that $500K in stablecoins…Treasury needs to build up first…but let’s get the ball rolling because there are a myriad of factors that go into a lending program and we should be ready if and when the time comes.

Just to be clear, nobody is suggesting forcing leverage on the community…this would be purely optional.

4 Likes

I support the idea of putting our staked pickled to work as long as it’s optional. I’m especially interested in ideas involving Stablecoins = less risk of losing stakes pickles. I’d like to see this conversation continue and these ideas get fleshed out.

One more thing, if we keep this to Stablecoins, it could also add to the original pickle mission “off peg bad, on peg good” - encouraging stakers to trade in the Stablecoins we want to push towards “on peg” - could this be built to be dynamic in this way?

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