Hi Wizards, Commander A.P.E. here representing Dogelon Mars, coming to you with a request from our growing DeFi community.
About Dogelon Mars
Dogelon Mars is a cryptocurrency established in April 2021 with the purpose of helping humanity reach the stars. Since inception we have taken actionable steps towards that goal including our sponsorship of International Space Station missions in low Earth orbit. We strongly believe in the value and the power of memes to focus people’s attention and action to create a better world.
The Dogelon ERC20 token has one of the deepest locked liquidity pools on the entire ethereum network, $36,000,000 liquidity in Uniswap V2 (of which 98.99% of it is LOCKED forever in the 0x0000dead / burn / black hole address) as well as over $6,000,000 in liquidity in Uniswap V3. Volumes on these pairs are topping the charts; despite Dogelon’s listing status on centralized exchanges the community trades ELON mostly using DeFi protocols on ethereum.
Recently, popsicle.finance added the ELON/WETH Uniswap V3 pool as an option under their Uniswap V3 optimizer product.
The Proposal
We’d like to add the Popsicle LP V3 ELON/WETH (PLP) ERC20 token as collateral for a Cauldron on abracadabra.money.
As reported by Popsicle, the current yield generated by the pair is 77% APR.
Benefits
The Abracadabra ecosystem will benefit from adding the ELON cauldron in a number of ways:
- increased TVL from deposits migrated from standard Uniswap V3 LP positions into Popsicle to mint MIM
- increased awareness given the size of the Dogelon Mars community (90,000 Telegram members and 300,000 Twitter followers)
- reliable & consistent yield from the Uniswap pair given the deep forever-locked liquidity on ethereum and the emergent arbitrage opportunities between DEX and CEX listing ELON
- additional usage and utility for the Popiscle platform
- meme cohesion
Risks
The risks are mostly centered around possibility of IL caused by the change in ratio between the ELON and WETH pair, which can be volatile at times, and likewise there is also inherent risk in the volatility of WETH as well as ELON tokens in relation to the dollar which could cause the value of the collateral to sharply fall during macro market downturns.
There is some risk in smart contract vulnerability, but the risk is quite low, given the ERC20 token for ELON is a standard OpenZeppelin ERC20 and has passed an audit by ZOKYO.
The risks can be mitigated by capping the Maximum collateral ratio to 50% or 60% to reduce the chances of liquidation during black swan events. The risk is also somewhat mitigated by the fact that there is such deep liquidity on-chain which cannot be removed because it is owned by the 0x0000dead address.
Possible Modifications
Instead of using Popsicle LP, it is possible to open a Sushi farm, similar to how the SHIB cauldron works. This would greater simplify the process, however, the drawback is not using Popsicle which I think is a complementary protocol and would greatly benefit the Abracadabra ecosystem.
Thank you
Signing out,
-Commander A.P.E.