Borrow/short positions ‘simplified’ though StakeDAO protocol

General
#1

Hi All,

(long post)

Borrow/short positions ‘simplified’ though StakeDAO protocol.

Summary:

Proposition for new financial product (I assume new tab on the protocol), to be investigated/considered

User experience/use case:

  • Mechanism to use any token get SDcurve pool tokens
  • Mechanism to use (potentially) any token to create a short position – adding SDT pool rewards on that position, in an easy-to-use interface

Utilize existing platforms to create lending/short positions

Target audience: experienced with financial products

Voting proposition (TBC): allocate resources to assess the feasibility of the below, add it to the long-term plan of the protocol. Create a feasibility report with pros/cons, develop draft outline mechanism/flow diagram, Draft UI, fees structure, asses resources required to implement, draft budget, draft timescale etc.

Motivation:

To create a simplified interface for user to create borrow/option positions within stakeDAO. Which I think is aligned with the StakeDAO mission to provide accessible financial services in one place.

If the benefit/risk is worth it, will also allow people to maximise yield on tokens

(Disclaimer I am not into the crypto industry/not a programmer/ not into the finance sector, so I decided to put it out their)

Create a mechanism to get yield on risky tokens

Provide ‘simplified’ (in one place) interface to borrow and create short positions

Increase stakeDao tvl/profits/services etc

Specification:

Short term investment/high risk

The idea is to utilise two existing platform to maximise yield and create borrow/short positions while combining existing SDT lp farming (curve).

Borrow

Maximise yield by borrowing through stake Dao interface:

Using Sushi swap

  • Use sushi swap to borrow stable coin
  • Stable coin is put to curve pool through SDT
  • Get SDcurve pool LP tokens
  • Get rewards from SDcurve token farming

Using Unit Protocol

  • Use Unit protocol to get USDP
  • USDP is put to curve pool usdp+3pool (strategy to be created similar will operate like existing strategies)
  • Get SDcurve pool LP tokens
  • Get reward from SDcurve token farming

Part of the selling point to the above would be the interface and the information provided i.e liquidation price, profit, option to add capital not be liquated etc.

If the position gets liquidated to USDP or other stable coin- all capital goes to curve pool and keeps getting rewards until claimed back

StakeDAO can recommend recommend borrowing ratio positions (depending on the tokens selected math form all the below) to control risk

Short position

Sushi swap

Utilize two pairs to create short position with Eth

  • Use stable coin (or any token) with ETH pair, borrow ETH
  • Use ETH to borrow stable coin (from sushi or Unit protocol)
  • Put Stable coin to curve pool
  • Get SDcurve pool strategy LP tokens
  • Get rewards from SDpool token farming

The innovation would be on the interface and provide clear information on liquidation price and profit/loss, percentage of the capital getting yield and track all 3 assets price on your position etc.

I understand that anything similar to the above is not fast implementation project, and its viability and user demand needs to be looked at and accessed carefully to ensure benefit on the community/end user

For:

Use any token get a position on SDcurve pool

Use (potentially) any token to create a short position – add SD pool rewards on that position

Maximise yield

Provide control on the risk exposed, provide a transparent interface for individuals to manage their positions

Manage risk if holding risky token-((?)- you will be liquated and not go to zero), get yield while doing so

Can providing fixed predetermined borrow ratio to manage risk (high risk, very high risk, ultra-high risk? With option to overwrite (similar to metamask fees interface)

Provide transparency in method and status of position

Use existing pools reward structure

SDT will provide an easy-to-use interface and track price feature, for each position. While maximising the yield form the short or borrows position

Cap loses on liquidation price- token from liquidation go to SDcurve pool, and start gaining interest (reducing some of the loses)

(I guess you can add a leverage on the above steps position)

Against:

Technical/implementation/other challenges I am not aware of.

Hi risk, requiring the use of two lending pool, (or two protocols) taking in account fees, and uncertainty may be only worth it if lending percentage is too high

USDP option will require new SDT strategy for USDP+3pool for curve pool

This is a concept idea the math and potential profits/scenarios in short position will need to be looked at in detail

Not a programmer but from what I understand, and it can be done?

Will need many warning in the process about the risk

(I guess you can add leverage on the above steps position)

Will need very good support documentation

Now the idea is out there. is this a viable financial product? and does it benefit the community, or creates a ‘gambling experience’ where people will lose their tokens? :confused: (I would not want that) is there a market for all the above? Does the above already exist?

thanks for reading all the best

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#3

Very good idea. Lending and short/leveraged trading possibilities totally fits the vision!
Need to find smart ways to do that, potentially create a stable coin, or do partnerships. We should vote on the idea and then work on smart ways to do it.

#4

Hi thank you reading, took a few days to notice I had replies, I have developed the idea a bit more once I saw their was some interest, planning to post a follow up soon.

#5

Follow up from initial post -

Panel and Paths
(got a bit carried away so is a long post)

Initially thinking about the proposal, I imagined it like a locked box that you put in any token and gives you SDT farming tokens or CRV pool tokens.
I later realised that this goes against the notion of keeping control of your tokens. Instead, I think this tool should empower individuals and give them visibility and flexibility and maintain control over their tokens and investments.

So would like to introduce the concept of the panel and investment paths or paths of investment. The panel and paths is how am thinking a tool can be visually representation to include the actions on the above proposal.

Panel will be a new tab on stakeDao protocol. The Panel will be the control panel for the Paths. In the Panel you would be able to create edit and interact with investment paths/paths of investment or referred as just paths.

The Idea of the path is to visually represent the path of your investment through protocols all the way to stake Dao farming pools. User will be able to create, edit their path and monitor their investment from he paths.

Each path consists of steppingstone(or stones), and each steppingstone consist of cobbles. (another denomination that might exist below cobbles is pebbles- to be used to refer to parts of the cobbles for future use)
The Path can represent the sequence as described on the above proposal (it expands vertically)
Stones (steppingstones) represent the action of the protocol an example the first a steppingstone can be lending protocol, and the second steppingstone below can represent curve pools.
Cobbles will represent pool/pairs/strategies within the stones. For example, Curve steppingstone will have a cobble for each pool that StakeDao has a strategy.
On the webpage the steppingstones will be a border with smaller boxes (cobbles) inside, the steppingstones connection can be represented arrows. Stones have groups of cobbles, connecting the stones you create your strategy path.
How I imagine the user experience, is that the user will have the option to create a path -mix and match visually - assume the process will need a logic test to check if selection follow an order-. Once the path is created, select the starting token, and the protocol will execute (walk the path) and all the actions selected on the path will be executed one by one staking tokens in sequence.
After that the user would be able to withdraw and pay in, interact with each step, and interact with each protocol (cobble) from within the path (under the panel tab) – i.e. increase the collateral, or add a stepping stone (i.e borrow using another token) and interact either individually or have the option for the protocol to follow/walk the whole path and raise your position in all the stepping stones.
Basic action withdraw and increase stake. there will be a link to the other protocols for the user to go and be able to manage their position directly check if there are any extra rewards (as not sure what level of integration would be possible).
There is also the option in the future to add new cobbles or stones (add new protocols/strategies)
Within the Panel, StakeDao can have pre-set StakeDao paths, that can be copied and issued to the user path section.
Paths can have 2 to many stones- for example to participate in a SDT pool assuming you hold eth you to create a path,

1st steping stone, select a sushi steppingstone – select the Eth-SDT cobble to borrow SDT– (second cobble can be used to borrow). a lending stone.
2nd steping stone, select the cobble for sushi liquidity pool SDT-ETH,
3rd steppingstone will be a stakeDao steppingstone, with the Liquidity pool farming cobble -

and that’s your path ready on the draft section. you then save/issue your path. form there you can select to either go one by one any pay directly in the path or put the initial value- and the protocol will go and pay in each step. Start earning rewards.

Its not a StakeDao v3 rather links the existing strategies, farming, and other protocols

Unfortunately, I don’t know the complexity required to create something like that –Also, the above assumed that is possible to link protocols and use them through a stake Dao interface, if not it can just be a tracking tool. Either way it I enjoyed thinking about how the above can be implemented and work

I have created a draft layout of the interface – used Figma, let me know how it best to share

Hope all the above make sense without the draft layout sketch.

I guess you can also imagine it as boxes with code sections (cobbles), that you can move around, and when you issue a path, it connects everything, - which then enable you to interact with the blockchain (specify number of tokens etc). Either using each box section separately or in sequence. The Steppingstone is just to give structure visually and separate protocols i.e. lending protocol /curvepool/StakDao (I don’t have a box analogy for that)

(it turned out longer that anticipated)

Again, thanks for reading- let me know what you think

Hope the naming pass the cringe test… – paths made of stone/cobbles, one can make their one path, a herd can go on a path- also the use of issue/draft, because you and issue drawing/design of paths (I guess). Panel is just a control panel

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