did you know most ice cream and sorbets use stabilizers to reach the perfect texture? This gave me an idea…
What if you wanted to keep exposure to a stablecoin while taking advantage of the higher APR’s on volatile coins? Let’s take an example:
- There is a lot of volume on FTM/ETH on UNI-V3, and the range isn’t too wide. So the APR on Fragola is quite better than USDC/USDT
- You are not interesting in holding FTM+ETH, and prefer to keep exposure to USDC only
- So you deposit USDC on a money market and borrow FTM+ETH against it
- Then you deposit your borrowed FTM+ETH in Fragola and enjoy the higher APR
Money markets have a limited choice of coins, but there is more choice on perpetual exchanges (just open a perpetual short position instead of borrowing on a money market). The problem of this solution is you need to consistently adjust your debt (or short positions) to match the ratio in Fragola in order to keep exposition to USDC only. This is time consuming and involves fees.
I imagine such a strategy could be coded in a product called “Stabilizzatore Sorbetto”. Automation of this strategy would solve the time consuming issue, and pooling together would reduce the fees for every participant.
- Stabilizzatore Fragola would automatically adjust the debt (or short positions) to match the ratio on Fragola
- Stabilizzatore Limone would automatically adjust the debt (or short positions) to match the 50/50% value of the debt in USD (I am assuming Limone will mostly use UNI-V2 clones on all chains)
The key of this strategy is to understand if the higher APR on volatile coins (compared to a stable/stable pair) compensate the fees. I am already running this experiment manually but I’d be happy to read your thoughts about it.
this would be an excellent option
I see a big potential if Stabilizzatore Sorbetto runs smoothly and Abracadabra accepts PLP’s as collateral. Sticking with the same example, the liquidation risk would be limited as you would be exposed to USDC and you would borrow MIM from Abracadabra. Thus this position could be leveraged without too much risk.
This is a neat idea. I am not sure how much demand there is for it. I also don’t trust all the apes that just ape into random stuff to do this and not realize they are effectively shorting the market.
Very interesting idea!
However - I would just simply name it after another flavour sorbetto
Well, I see it more as a complementary product to the Sorbetto’s. Basically:
- Stabilizzatore Fragola would convert a nice APR on volatile assets in Fragola to a nice yield on a stable asset
- Stabilizzatore Limone would convert a nice APR on volatile assets in Limone to a nice yield on a stable asset
Of course, the APR wouldn’t be as high as in the underlying Sorbetto because you need to deduct the hedging fees, the collateralization ratio, the gas fees, etc… But in exchange, you wouldn’t be exposed to the price variations of the underlying volatile assets. Note I focused on a stable asset (hence the name “Stabilizzatore”) because I saw it as an easy way to leverage the position via Abracadabra without too much risk (thus getting back a bit of the return you lose by stabilizing)
Popsicle + Perpetual Protocol + Abracadabra provide all the gears to make this work. Maybe we could get preferential rates from Perpetual and Abracadabra now that they are partners of Popsicle…
Hey you’re right!
Wonder if we can get all the gears on Polygon, since Uni,Ice and Abra are moving over there as well.
like was mentioned above it would be great to have all the gears on polygon since uni has moved there, and maybe concentrate the capitol to the chains with the lessor trans fees so that the capitol is not wasted on settlement fees i.e. eth network