BTC on Ethereum diversified
BTC++ it’s a weighed allocation between the different representations of Bitcoin on the Ethereum.
There is a race for bridging Bitcoin to the Ethereum Network. a number of projects have made steps in that direction with adopting solutions that go from 100% custodian services to mechanism design that might result in economic finality for a trustless swap of BTC<->ETH.
Each project has different tradeoffs in terms of security, even assuming the assumptions are correct the risk associated with bugs on the system makes holding those tokens risky in isolation.
Deploy a BTC Pie which holds a set of different representations of Bitcoin in the Ethereum network called BTC++ deployed as a Balancer Pool.
Benefits for users
Users who want to have controlled exposure to different BTC on Ethereum don’t have to deal with complicated and/or expensive rebalancing procedures.
Holders of WBTC/pBTC/imBTC/sBTC… who have those tokens sitting idly in a wallet can now put them to work so they can effortlessly earn fees.
Why Balancer pools
Balancer is a nascent ecosystem with significant improvements compared to other AMM out there. They are a week away to launch to the masses and there is currently no BTC pool available. Claiming the first mover advantage and bootstrapping that ecosystem would have several benefits:
BTC++ could easily become the largest pool in the Balancer ecosystem, which means most of the trades would be routed through the BTC++ pool.
Having a pool with only BTC tokens it’s more convenient for liquidity providers than Uniswap as there is no ETH exposure and the impermanent loss it’s minimized.
BTC++ can become a core asset for future Pie that need exposure to Bitcoin.
If this is the first time you are seeing this term, please refer to this article by @pintail. In summary, the impermanent loss is the loss in value when investing liquidity in a pool compared to just holding tokens.
Allocation without synthetic tokens
As for now, I’m considering 3 tokens to start with. In the future, multiple tokens could be considered such as renBTC, tBTC, pegnet BTC, etc.
|imBTC||The tokenized Bitcoin||0.25|
Usecase for traders
Arbitrageurs can easily profit by leveling market inefficiencies between DEXs and even CEXs on BTC coins by confidently keep exposure to BTC only in the pools.
Ethereum Smart Contracts seeking liquidity for a variety of other use cases (liquidation positions, trading, etc.) have a single point to look at for all their Bitcoin liquidity needs.
[EDIT: removed DAO fees for now]