Introducing Pie Smart Pools
Our first smart pool utilising the Balancer protocol BTC++ is live on mainnet!
BTC++ tokenises exposure to Bitcoin on the Ethereum blockchain.
Pie Smart Pools
Pie smart pools are managed Balancer pools which add extra functionality in the form of safeguards and PieDAO governed readjustment of weights and removal/adding of tokens. We call them Pies. Providing liquidity to one of these Pies gets you tokenised exposure to the underlying assets and additionally generates yield from the Balancer ecosystem utilising the liquidity in these pools to perform token swaps.
Balancer
Balancer is an AMM protocol much like Uniswap which allows anyone to create a self balancing index fund like token. What sets Balancer apart from Uniswap is that it allows for more than two tokens and configurable weights. Any pool created on the Balancer protocol is used to aggregate liquidity when users want to swap one token for another. They do this by using a “Smart Order Router” which connects pools together, finding the most efficient path for users to exchange tokens.
Added Value of Pie Smart Pools
You can currently only add liquidity to Balancer pools if they are finalised. In a finalised pool the weights, underlying tokens and fees cannot be changed. While this is great for trustlessness there are some limitations which Pie smart pools solve.
Limiting loss of frozen assets
When using a standard finalised Balancer pool and an asset gets frozen for some reason there is no way to redeem the other underlying assets as the transaction to exit the pool will revert when trying to do the transfer of the frozen asset. Using a Pie smart pool would allow PieDAO to remove the asset which would limit the loss for the token holders to only the value of that asset.
Mitigating loss of price collapse of one of the assets
Unlike finalised pools, trading in Pie smart pools can be halted. We will prepare a transaction from a multi sig account which gets broadcasted in the case that trading needs to be halted. There will be bots running which monitor for any abnormal behaviour regarding the price of the underlying assets and trigger the prepared transaction if thats the case. This minimises the risk of a single asset collapsing draining the entire pool.
Adjusting weights and adding new tokens
Adding and removing tokens can be delegated to a smart contract which allows for sophisticated readjustment of the weights and the possibility to add new tokens to the Pie. At the beginning these readjustments will be managed manually by the PieDAO.
In summary Pie smart pools allow for a secure truly hands-off DeFi experience by delegating the management of Decentralised Tokenised Funds to PieDAO.
