Get the weekly summary of crypto market analysis, news, and forecasts! This Week’s Summary The crypto market ends the week at a total market capitalization of $1,09 trillion. Bitcoin is up by over 2% to reach around $27,200. Ethereum increased by nearly 6% to close to $1,700. XRP gained almost 2% in value during a highly volatile week. Almost all altcoins are trading in the green, with virtually no exceptions. The DeFi sector maintains the total value of protocols (TVL)…
Pickle. Finance is the latest Decentralized Finance (DeFi) experiment in a series of food-named protocols that have seen a mercurial evolution shortly after their release.
We witness new DeFi protocols surfacing on a quickly-expanding market that has no peak insight every day. Most of them carry native tokens that see a thousandfold increase in value overnight. Some of them disappear in thin air just as quickly as they popped up. Others become money-engulfing assets that reach and maintain global popularity matching established cryptos like Bitcoin, Ethereum, or Ripple’s XRP.
Now, Pickle is less than a month old, and it already amassed more than $31 million in locked value. It saw impressive returns in its first week of trading, with approximately $50 million in daily volume, and it reached an all-time high of $85.24 on September 14.
This Pickle is one of the most appetizing projects on the wide table of food named DeFi protocols. But is it worth a bite? Let’s find out!
What is Pickle Finance?
According to its website, Pickle Finance is “an experiment using farming to bring stablecoins closer to their peg.”
The project emerged on September 11, 2020, on Ethereum, and it quickly increased in value and popularity to become among the Top-20 DeFi protocols on the market. Its presentation is rudimentary, and its site even more. Some may even take it as a joke thanks to its logo, none other than Pickle Rick from “Rick and Morty.”
In recent times, stablecoins like USDT and DAI have drifted slightly from their pegged fiat currencies. Limitations in monetary policies and market fluctuations have led to stablecoin users losing serious money in trading. Furthermore, the current DeFi boom and yield farming craze have forced farmers into buying and selling huge amounts of stablecoins in their bid of finding the best yield out there.
Pickle Finance comes with a solution to these issues. The protocol empowers farmers to earn interest from pumping more liquidity into the four most popular stablecoins: DAI, USDT, USDC, and sUSD.
How Pickle Finance Works?
The Pickle Finance protocol has a native token, called PICKLE. It uses it as an incentive together with vaults and governance to get stablecoins closer to their pegs.
The protocol works by assigning PICKLE tokens to Uniswap LPs of different stablecoin pools. This way, users are incentivized to move capital between various stablecoins.
Next, Pickle uses one of its other features called Pickle Jars, or pJars, to employ various active strategies like leveraging flash loans to stablecoins off their pegs.
Finally, the Pickle protocol uses PICKLEs as a form of governance on the platform.
The Uniswap LPs pools that receive freshly minted PICKLE tokens include:
A pool where the stablecoin is above its peg will receive fewer PICKLEs, and vice-versa. This way, farmers will be more motivated to chase the best yield and have more control over the balancing process of stablecoins.
The initial distribution of PICKLEs is based on Curve.fi’s sUSD pool.
Pickle Finance Features
It may seem like a rushed project to some, but Pickle Finance shows that the developers spent considerable time building a solid set of features. The most important ones include:
Farmers can use this feature to change their LP position between different stablecoin pools to support off-peg stablecoins to return to their original peg quicker.
Pickle Jars (pJars)
This feature was initially called Pickle Vaults (pVaults), but the developers renamed it a few days later to ensure its kinship to the Pickle brand.
Pickle Jars is very similar to Yield. Finance’s yVaults. It uses PICKLE deposits to employ two vault strategies that help incentivize farmers and bring stablecoins closer to their pegs:
- LPs can deposit sCRV to earn CRV tokens and then sell the CRV tokens for the least supplied stablecoin to earn additional sCRV
- LPs can use flash loans to leverage up and arbitrage between stablecoin while producing vault owners’ returns.
Governance on the Pickle Protocol
PICKLE holders have voting rights on the Pickle platform. They can vote on community proposals using a unique quadratic voting mechanism that reduces the control that whales have over most decentralized governance systems.
The Development Fund
The protocol saves 2% of each PICKLE distribution from fueling its development and ensuring that the team can focus on it full-time.
The PICKLE Token
Pickle Finance launched its PICKLE token on September 11, 2020, and it saw a mind-blowing 1,000% increase in value within its first 24 hours of life.
A few days later, the community decided through a governance vote to implement a halving schedule for the first month and then distribute 1 PICKLE per block thereafter. Future distributions will be done via a timelock contract, with input from the governance community.
At the time of this writing, one PICKLE was trading for $38.21, and the token was registering a 24-hour trading volume of $12 million on average.
Why You Might Want a Bite of the Pickle
Most DeFi protocols come with similar risks for their users. One of them is the possibility that the liquidity boosters will suddenly withdraw all their funds before investing it into a more profitable farming project.
Pickle Finance is not impervious to this risk even more as its high Annual Percentage Yield (APY) pools are set to come of age very soon.
However, the project’s team seems to be dedicated more to its development than to cashing out. The pJars feature and the rewards that may derive from it may transform Pickle into a solid protocol for yield farming similar to industry-established names like Aave and Yield.Finance.
For now, Pickle Finance has no audits. Still, it is planning to contract one together to analyze a more equitable inflation schedule and build a more comprehensive governance portal, among other UI/UX improvements.