The Great Switcharoo
Many people mistake pickles to be just another food token, this assumption is incorrect. Pickles is in fact on the frontier of a whole new era of finance. However, I’m not here to talk about that — I’m here to talk about the Great Switcharoo which is complete conjecture about the future behavior of the pickle farmers.
It begins in the next few hours, maybe after this load of bollocks is published, who knows — it could be within hours or weeks, but what I can almost guarantee is that it will happen at some point. Of course, not everyone has the background on what I actually mean by the Great Switcharoo — this short essay will try to explain that in simplified form.
Laying the foundations to build upon
In the next couple of days something will happen to pickles which will undoubtedly shake the foundations of the current purpose of the token. It will be a fully fledged governance token which will have to be staked in order to vote in any pickle governance proposals and more importantly, it will be a magnet, when staked, for fees which are farmed from strategies in the pJars.
Okay, and what?
This is where it gets interesting because now pickles has a purpose aside from being a token you farm or provide liquidity with.
I have a number of assumptions to make the conjecture possible:
- Demand will, and is already organically rising because the project is heading in the right direction — super developers with a very intelligent and thoughtful community. We have seen the developers and community (even some of the best minds in defi) really get behind the project since it’s inception and there is no reason to suggest that is going to stop any time soon. In fact, after the pjar error — which arose because the devs were enacting PIP-8(the Pickle Improvement Proposal which will enable pickles to become fee magnets) and neglected to call a specific migration function before changing the strategies — it has strengthened the Great Connection between community and developers even more!
- Audits are being done as we speak, after which pickles will seem like a far more trustworthy option for farmers and interest hunters — so I assume that TVL will rise enough to make pickles a very vibrant place to be over the coming weeks. Moreover, audits allow pickle.finance to feature on very popular defi websites with real market capitalization etc.
- I am pretty much assuming that pickles will head in the right direction without any major hiccups between now and the Great Switcharoo.
How the Great Switcharoo begins
Sometime over the next couple of weeks, if not days, I propose that pool2 liquidity providers will start to withdraw their liquidity and use the ether to buy pickles because of a number of reasons which begin to make up the Great Swicharoo under the assumptions listed above (pickles as a project is extremely bullish).
The best being (Ceteris paribus):
- Rewards halve to roughly 0.7% interest a day on Friday, and then down to as little as 0.35% the following Friday, and then dropping every Friday after that by 10% which means that each of us is probably best served unpooling and investing the ether into pickles to increase our pool size more than it likely would increase within the next few weeks by being a liquidity provider — even likely surge to somewhere back to 55 dollars would net you more pickles if you were to pool again (so even if you forget about the bullish sentiment and pickles becoming a fully fledged fee paying governance token this is actually the smart option at this point, assuming you believe in thee project)
- The truth is that at this point it will probably take years to actually farm enough pickles to double your liquidity pool pickle stack (and that is without bringing impermanent loss into the equation), and the likelihood that pickle will outperform ether (at least in the short term).
- Pickles will be a fee magnet within the next two days, sure, the fees at first may be low but I am willing to bet there are other crazy buggers out there who are already dreaming of pickles becoming the hedge fund of the future — these individuals want the risk because the reward is so good, again, with the assumptions above. I know individuals don’t like the following comparison but I am assuming again that pickle will continue on the same trajectory it has been on for the last few weeks in terms of developing and community strength.
The pickle.finance TVL in pjars alone is ~133m and the picklemarket cap is currently ~28m
The yearn.finance TVL is ~760m and the governance token (YFI) has a market cap of ~762m
This is not an easy comparison obviously, pickle has obstacles to come over like what happens when UNI staking stops and I am realistic about that, but so are the developers who are tirelessly working to implement the next pool to keep the TVL high. However, you get my point, as a fee paying governance token pickle is super under-priced, and I personally think YFI is under-priced too.
The Great Switcharoo demand side
Combine these two together, and you get to see just the tip of the Great Switcharoo iceberg. The best is yet to come.
The Great Switcharoo describes the behavior individuals will undertake once they have the realization of what is about to occur. This culminates in increased demand because of the numerous reasons explained above, i.e
- Trustworthy and hard working developers who are by my guess serious ethereum developers who are remaining anonymous so that they can build on top of ethereum
- A mature and knowledgeable community who are united in their efforts to see pickle.finance succeed
- Auditing which opens the doors to exchanges, websites and more risk-averse investors into pjars and even pickle itself
- Increased incentive to try and profit off pickles as an asset, rather than just as a farming tool because interest rates are decreasing weekly while we still have volatility as a small market cap in a market which will continue to grow (DeFi)
- The reality that pickle.finance could genuinely become a profitable DAO with all surplus fees paid to pickle stakers
The Great Switcharoo supply side
While that is happening to the demand… what is happening to the supply? It’s slowing down, in fact, there are more pickles in circulation right now than will ever be added to the circulating supply, i.e pickle supply will never be double what it is now.
Remember the assumption that individuals will pull their liquidity out because they want pickles now — because they realize that they will not be able to farm at the same interest rates again, and this is their last chance to get a big bag of pickles? Under the assumption that liquidity providers will start to realize that they are better off holding pickles for price rise gains, or/and governance… The current liquidity providers will start to depool from pool2 before putting some, if not all of that ether into pickles (depending on their risk level and how much they like the project).
The Great Switcharoo
Because of all the reasons above, I think it’s fair to expect more and more people to start to depooling some of their liquidity from pool2 and switch the ether into the pickle. The Great Switcharoo.