Greetings, fellow Picklers!
First off, let me say that it was a pleasure working with @Larry_Cucumber and the team to develop this proposal.
I hope the community will indulge me, as this post is probably going to be longer than OP.
It’s been a long time since I’ve been this excited about a project and I’d like to contribute what my life experience has taught me.
I truly believe that we have a chance to create something special here at Pickle.
That being said, we’re at an inflection point where the decisions made in the next 2 weeks could very well decide our fate as a project.
The goal of creating a DAO-based hedge fund is an ambitious one to be sure, and the journey will undoubtedly be bumpy, but I’m convinced that we have the ingredients to succeed.
We just need to tweak the recipe a little…
In my humble opinion, DeFi has the potential to cause severe disruption in the asset management industry for one simple, yet essential reason : Ease of raising capital.
As anyone who has raised/managed external capital will tell you, it is one of the must frustrating and thankless jobs out there. People are more willing to sign over their souls than their money.
I used to manage a small fund a few years ago. Nothing big, mind you, as we started with $2M from family and friends and eventually built up our AUM to $15M over 3 years.
I can still remember how hard it was to raise each and every dollar of that capital - constantly following up, wining and dining, having to convince spouses in some cases, and the list goes on.
Enter DeFi, where the best traders and strategists can raise hundreds of millions in days (or hours for that matter) - without roadshows, gladhanding and regulatory hurdles (though I’m sure those will come in time)
Yield farming may be a fad or it may not, but the platform to raise capital will remain. Projects that can envision this future and plan for it are going to be the ones that will thrive in the long term.
Now, couple this with projects like Synthetix, UMA, Barnbridge etc. These guys are all working on bridges between DeFi and traditional finance.
What this means is that one day soon, we will be able to trade derivative versions of stocks and bonds through DeFi. Futures, options, bonds, you name it.
It’s already happening: UMA’s Synthetic Token Builder allows you to track the price of ‘anything’
I’m going to repeat myself here so that it sinks in: We will be able to buy virtual Apple shares though DeFi; no bank, no broker, no custodian -> ours keys, our crypto
When enough liquidity enters this space, it’s going to trigger a seismic shift in the industry because the best traders will no longer be constrained by ‘the system’.
The best and brightest will be rushing to establish their own decentralized funds because they will get to keep a much larger piece of the profits than they would at an institution.
Their clients will follow them because they value performance above all else, and the safety of the system will have been well established by then.
Most importantly, regular retail investors will finally be able to access the talent that has been reserved for ‘accredited investors’.
$10B locked in DeFi is less than nothing when compared to the trillions of dollars looking for yield in this ZIRP world.
So that’s the big picture. Moving on to Pickle…
Any asset management unit depends on 3 pillars to thrive : Trust, Capital and Performance.
Right now, Pickle has the trust of the community, and a dev team that has proven deserving of it, based on their professionalism and quality of execution.
As validation of that trust, we have $125M in the Jars and 34% of Pickles currently staked.
But trust only goes so far, and though it might not seem like it, I believe the next 2 weeks are going to be pivotal.
We’re also fortunate enough to have adequate liquidity, but money is fickle and we can’t afford to assume that it will continue to be the case.
IMO the only reason we continue to have this liquidity is because we have been directing the majority of PICKLE rewards to the ETH/Pickle pool.
Why the urgency? Uniswap mining will look very different in a month’s time and we don’t have enough information yet to see what the landscape will look like.
That’s 70% of our TVL that’s potentially going to be looking for a new home in 3 weeks, and if we don’t have an attractive option ready to accept funds, we’re going to be left standing with our proverbial pickles in our hands.
So, now is the time for bold and decisive action.
Question 1: Has the vision for Pickle changed?
Let’s rewind a little to see how far Pickle has come in such a short time. Since I wasn’t around for the first week, please feel free to point out any inconsistencies.
Pickle was envisioned as an experimental protocol in keeping stablecoins pegged. On-peg, good. Off-peg, bad.
A novel initiative, and one that was sorely needed at the time, since DAI especially kept moving off its peg.
All good so far…the mission, objective, and messaging are all in alignment -> hype + good market response
Along comes big papa Uniswap, who announces UNI liquidity mining.
The team is perceptive enough to recognize the opportunity, and race against time to roll out PickleJars to coincide with the UNI launch.
UNI launches and boom, suddenly we have huge TVL and Pickle goes through the roof. Even better!
At this point, the messaging isn’t really in line with the mission, but nobody cares because it’s moon time…
This is not a shortcoming imo, lest we forget that it’s just 4 people on the core team and they’re suddenly managing hundreds of millions of dollars? It’s a lot of pressure.
The fact that the team managed to pivot in time to capture the opportunity is exactly what a capable hedge fund needs: agility.
September 29 - we find ourselves in a pickle…an inadvertent error throws a wrench in the works. Trial by Fire.
This, right here, could have broken a lot of projects/teams.
However, the team manages to fix the problem post-haste, all while having to deal with a very angry Discord (what a night that was).
I’ve said it before; the professionalism exhibited in crisis is what earned my trust (and I’m usually very cynical).
Since then, we’ve launched new Jars and Farms for 3pool, renBTC and WBTC/ETH + the new DAI strategy. All positive steps.
Yet, the price of PICKLE is languishing. Why? This is a question that many in the Discord have been trying to answer.
To me, the answer is simple.
a. doesn’t know what we’re doing (marketing problem)
b. doesn’t understand where Pickle is headed (roadmap/vision problem)
Contrast this with FARM. They might be meme-y and ponzi-like, but they make no secret of it.
The market knows exactly what its getting, and money always chases money.
The smart money will have bailed long before the house of cards tumbles, and the cycle will continue as it always has.
That concludes the history lesson. On to the present…
Question 2: Where do we place our bets with the highest odds of success?
If we’re going to build stable, growing AUM/TVL, we have to focus our efforts on the base layer of crypto liquidity, ie. Stablecoins, BTC and ETH.
That’s the bridge to ‘real world’ money. If you believe, like I do, that we’re only in the 1st inning of DeFi and that mass adoption is coming, we must position Pickle to be a leader in that space.
Additionally, we must focus on attracting what we used to call ‘dead money’. This is not dumb money that FOMOs into the farm of the week. Nor is it the smart money that constantly seeks to maximise yield.
We’re talking about money that does its research and finds a good investment provider that offers safety, simplicity and liquidity. As long as returns are above their ‘acceptable’ threshold, they stay put.
These investors look for a fire-and-forget solution, ideally one that they can check in on every month/quarter, just to confirm that what was promised is being delivered.
I believe the future of Pickle lies in single asset pJars, with a simple, idiot-proof interface.
Users deposit their choice of asset in one click (one transaction) and the pJar does the rest behind the scenes:
- Deposit stablecoins into 3pool
- Deposit 3pool LPs in pJar
- Stake pJar tokens in corresponding farm
We develop a simple dashboard with just 4 datapoints: Deposited amount in original currency + US$, Current balance in original currency + US$, Pending Pickle Balance + US$, Current APY.
And just 3 buttons : Deposit, Withdraw, Harvest
The single-asset DAI strategy is a great start, but not many folks use DAI (it’s more a super user thing).
While the more complex strategies are undoubtedly ‘cooler’, the majority of investors prefer the simplest solution for a given yield.
I’ve been advocating for 3pool and its boost for this exact reason, as we can build a simple solution around it.
It also has at least a tangential connection to the original off-peg/on-peg mission as moving large volumes of stablecoins into and out of the pools will influence prices due to the deposit/withdrawal bonus incentives.
We start with 3pool and its 330M in stablecoin liquidity.
Next, renBTC with its 340M in BTC liquidity.
Finally, a single-asset ETH strategy if and when we can identify a suitable source of yield.
Question 3: How do we Execute?
For the next 2 weeks, we focus all our efforts on getting whitelisted.
In my mind, we should be ready to announce a new PickleJar the moment we are whitelisted.
Our launch tweet could look something like this:
Market jitters? Need a safe place to park your stablecoins?
Pickle Finance has you covered!
Audited by MixBytes and Haechi, whitelisted by Curve Finance,
Presenting PickleJar X, bringing simplicity to DeFi!
Deposit your stablecoin of choice in just 1 click to earn 20% APR without risking your principal!
Insert pplpleasr video here
In order to get to that launch point, we have a long list of things to do and less than 2 weeks to do it. (If the Curve governance vote takes another week after Signal)
We have to get our roadmap, mission, and messaging in alignment again:
- All this is moot if we can’t get whitelisted, so we mobilize the community…post the link to the Curve forum every few hours and encourage members to comment…full court press
- Pass the boost vote and be ready to deploy funds
- Develop pJar X
- Tweak the UI and simplify it. Right now we’re kind of in between the original meme-y site and a professional FI dashboard.
- Get ourselves on DeFi Pulse, again maybe mobilize the community for this. If all that’s holding us back is audits, we could try to get a commitment from them to list us upon whitelisting?
- Marketing boost to spread awareness
- Drop the internal switching fees
That’s just Phase I, and if we can accomplish it, I have no doubt that we can attract $100M+ to this new pJar. From there, to infinity and beyond!
Plan B if the Curve whitelist fails
Nothing really changes from a development standpoint.
Attracting TVL will just become harder as we’re going to have to consider alternate, much smaller sources of stablecoin liquidity (Swerve etc)
The ultimate objective should be single-asset PickleJars that automatically switch between the highest yielding strategies.
Once we have implemented the simplified one-click PickleJars across all the major assets (USDC/USDT/DAI/BTC/ETH), we focus our development efforts towards this.
I have plenty of ideas for Phase III, including one major opportunity in the crypto space that nobody seems to be eyeing yet and could really take us to the next level, but let’s take one step at a time.
Thoughts on Current Issues/Proposals
This should be implemented ASAP.
Rule #1 You never let the customer leave the store.
Let people shop for yield, but internally!
Once they hit withdraw, there’s no guarantee they’re ever coming back.
Though it might be unpopular, you should NEVER drop withdrawal fees when your AUM is dropping and stock price is tanking because that is when people WANT to leave.
The time to transition to higher profit sharing and management fees is when folks are throwing money at you and nobody wants to leave.
In my opinion, dropping the withdrawal fees right now would be handing our competition the keys to the kingdom.
The loudest voices calling for the drop in fees will be the first ones out the door, regardless of what they say now about the greater good and attracting fresh TVL.
Yearn is taking this step out of desperation imo, as they are no longer competitive in APY terms. Why blindly copy the move when our APYs are far higher?
At the very least, we should wait for them to actually implement it (I believe they are still at the voting stage) and see the results before taking a decision.
Uniswap mining ends in under a month, and since we had the withdrawal fee from inception, everyone in the UNI pools has (or should have) factored it into their investment calculus.
That’s potentially $450K in fees that we’re saying goodbye to…and for what? A possible boost in TVL that may or may not materialize? We simply can’t afford it imo.
The same goes for the profit share…the time to hike is from a position of strength, not weakness.
By hiking fees now, we will anger our current TVL, especially the UNI pools.
Just as an example, look at the UNI USDC/ETH farm which is currently at 30% APY
This would drop to 23% under the new fee structure, combined with no withdrawal fee.
If I’m in this farm, what’s my incentive to stay? I might as well leave for free and farm something else.
It’s easy to project that we would earn X more under the new structure, but what happens when half the TVL leaves? You’re just taking a bigger slice of a smaller pie and that’s a recipe for disaster, long term.
I know that everyone’s seeing the FARM pump and asking themselves how we can replicate it, but should we?
One of Pickle’s key differentiators is the low fees (too low imo) and I am in favour of increasing it to around 15% + 1% annual AUM fee in lieu of withdrawal fees, but again, this should be done later from a position of strength.
I think our emissions schedule is fine…SNX’s model is tried and tested.
I urge EXTREME caution when thinking of turning these levers because these are make or break decisions.
Hasty changes to fees and emissions in response to short term price action is what has landed Dracula in their current predicament, and I would hate to see that happen here.
I think it makes sense to pay out staking rewards in PICKLES by having the Treasury buy PICKLES with the weekly staking rewards.
Matching the underlying asset with the reward usually is a good thing.
Currently, if PICKLE goes up, staking APY comes down (assuming 35K/week stays constant) but people are happy because PICKLE went up
When PICKLE goes down, staking APY goes up, but as we’ve seen this week, fees were only 18K so real APY went down and stakers are not happy
If we were to pay out rewards in PICKLEs
When PICKLE goes up, staking APY goes down and users get less PICKLES, but everyone is happy because PICKLE went up
When PICKLE goes down, staking APY goes up, fees might go down again but the same $ can buy more PICKLEs…stakers get more pickles and are less unhappy
Though this approach may be considered mildly ponzinomic, I think it’s the best option, and the community seems to prefer it.
In my opinion, most stakers aren’t doing it for the reward. They’re in it because they’re bullish PICKLE and the reward is just a bonus. Give the people more PICKLEs!
I also believe that a discussion on voting rights for stakers is long overdue.
Only once stakers have a vote will PICKLE become a true governance token. We can then make progress towards a true DAO.
I’ve seen a lot of great ideas regarding the Smart Treasury, investing some of the Treasury funds, paying the surplus back to stakers etc.
All great ideas for the future, but we simply don’t have a big enough Treasury at this time to take on additional risk.
We need to build up the Treasury to at least 1M before implementing any of these.
This would allow us to smooth out the staking rewards…ie dip into Treasury in weeks like this when fees are low.
After we establish a suitable reserve, we could definitely look to diversify the Treasury or just pay the excess back to stakers.
This is our Achille’s Heel. Sorry to be blunt, but our marketing game is ABYSMAL.
I know that a major reason for this is limited team bandwidth.
We obviously want our devs to focus on what they do best, so we as a community need to take the initiative.
There’s far too much to say on this topic, so I’m going to end here since this post is already far too long.
If you’ve made it this far, I salute you as a true Pickle Private!
Thank you for reading!
I know I’ve expressed a lot of strong opinions here. Please know that my only intention is to help PICKLE succeed.
I’d love to hear any and all feedback.
The decisions ultimately lie with the team and community.
If the consensus is to go for a ‘pump the coin’ strategy, I’d be personally disappointed but I have a lot of ideas for that too
May the future of PICKLE be bright!