Yield farming is the new buzzword in the crypto space that allows coin owners to leverage the highest possible return from various DeFi products and protocols. And Synthetix’ new yield farming pool is aimed at improving the liquidity of Bitcoin assets on the Ethereum network through the provision of synthetic assets like sBTC, renBTC and Wrapped Bitcoin, says Kain Warwick.
In a recent podcast interview on the launch, in collaboration with Curve and Ren, the founder of synthetic asset DeFi platform Synthetix told Nugget News that their aim “is to create the most liquid ethereum-based BTC pool available to offer traders access to the lowest slippage for trades between sBTC, renBTC, and WBTC”.
Elaborating on the different coins, Warwick said, “Synthetic Bitcoin (sBTC), which is issued by the Synthetix protocol, is purely a synthetic representation of Bitcoin, so there’s no Bitcoin that’s locked up as collateral against it, it is just a synthetic asset that tracks price feed that comes in, … it does have a hard peg to Bitcoin but it does have some other cool properties like the ability to convert it from synthetic USD to synthetic Bitcoin.
“So, within the synthetics ecosystem, sBTC is quite powerful but for people who potentially have Bitcoin that is you know currently sitting on an exchange or sitting in cold storage and want to organise and bring it into the etherium ecosystem for the average person who doesn’t have access to wrapped BTC (WBTC), which requires KYC.”
According to him, the platform also allows coin owners to turn up to the rain bridge and send their Bitcoin to an address where it will be tokenised as renBTC on ethereum and then they can convert it from there into stable coins. “Anyone who’s got renBTC can turn up to the rain bridge, convert it back to be DC or vice versa.”
And because of the unique way the system has been set up, participants who provide WBTC, renBTC, and sBTC liquidity to the new BTC Curve liquidity pool will simultaneously earn BAL, SNX, REN, and CRV. That’s a yield farmer’s dream come true, according to Warwick.
“The balancer pool created by Synthetix and Ren will also earn BAL tokens, which will be redistributed to Curve BTC liquidity pool contributors. Finally, the Curve reward token (CRV) will also be redistributed to liquidity providers. The incentive will run for 10 weeks, ending in August 2020,” he said.