BabelFish — the future of stablecoins
DeFi on Bitcoin
Decentralized Finance (DeFi) has grown exponentially since summer 2020. Although most of it has happened on the Ethereum network, it is now possible to lend, borrow and yield farm dozens if not hundreds of tokens on many other networks. Below is a short, non-exhaustive list of the protocols I’ve personally used during the past month. This list includes Decentralized Exchanges (DEXes) and Yield Farms:
- Ethereum: Uniswap, Sushiswap…
- Polygon: Quickswap, Dfyn, Sushiswap, Adamant, Gravity…
- Avalanche: Pangolin.
- BSC: PancakeSwap.
- Rootstock: Sovryn.
When you’re getting serious about DeFi, you start hunting for the best opportunities and you naturally find yourself venturing onto other chains. As you do this, you quickly face an unexpected problem: the fragmentation of liquidity between the many chains you work with.
Here is a situation I encountered in August 2021. I had been providing liquidity to the FRAX-USDC pool of a large DEX (these are two stablecoins) and farming the liquidity pool token on Adamant, all of this on the polygon network. After a month of farming with decreasing yields, I saw a better opportunity with another stable-stable pair on another DEX: DAI-USDC would give me more yield. Conceptually, there is nothing difficult here: I just had to unpool FRAX-USDC, sell FRAX for DAI and pool DAI-USDC. Should have taken a few minutes. Well, it nearly became a nightmare. I had $15,000 FRAX to swap and the liquidity was non-existent on most polygon DEXes and low on the one I was leaving. The slippage was so high that I had to proceed in several steps and lost about 1% in fees.
Now this is a clear barrier to scaleability. What if one wants to move around high five figures or six figures from farm to farm on a weekly or monthly basis?
And the same situation can happen with any stablecoin on any chain.
Stablecoins? A fragmented space!
Did you ever wonder what the stablecoin landscape is like? Sure, when you use only one or two like USDT/USDC to trade occasionally, you rarely have any liquidity issues. But if you start doing DeFi seriously, you suddenly find yourself juggling:
The Ethereum tokens of USDT (Tether), USDC (USD Coin), TUSD (TrueUSD), UST (TerraUSD), BUSD (Binance USD), DAI, FRAX and some more exotic ones. But you also have to use THEIR BRIDGED VERSIONS, on Polygon, BSC, Avalanche, Rootstock…
This quickly becomes a burden during the execution of your DeFi strategies because you have to spend time switching from one to the other intra-chain and also bridge them cross-chain.
But you also have to consider the inherent risk of each one of them. Some carry the risk of seeing the company that emits them default (Tether FUD anyone?) while others are pegged algorithmically and may loose peg unexpectedly…
This is where BabelFish protocol brings an innovation into the stablecoin space.
BabelFish — a stablecoin aggregator
BabelFish is a protocol that aggregates stablecoin liquidity:
- From multiple issuers.
- From multiple chains.
In practice, BabelFish is centred around XUSD, a meta-stablecoin, pegged to $1, whose liquidity relies on all stablecoins on all chains.
The protocol allows users to swap any stablecoin for another, on any chain, through smart contracts in a completely decentralized way. For example, had it already been available, I could have used it to move my 15,000 FRAX to DAI seamlessly.
XUSD itself can be used as a stablecoin to trade. In fact it is already the preferred stablecoin in the Sovryn ecosystem that is slowly phasing out rUSDT, the Rootstock version of Tether. rUSDT owners have been encouraged to swap to XUSD with a 1:1 ratio and to lend their XUSD on Sovryn to share a reward in SOV that amounts to a +100% APY at the time of writing.
XUSD can already be bridged to Ethereum (USDT, USDC, DAI) and BSC (the latter + BUSD) stablecoins through Sovryn if needed.
BabelFish — insurance for users
BabelFish will increase the available liquidity by pooling stablecoins on multiple chains, but it will also bring insurance against the incurred risks mentioned above.
The protocol will lend the stablecoins pooled on lending markets and will buy Bitcoin with the resulting yield. This Bitcoin will be used as an insurance fund for the protocol users.
How to catch $FISH?
The BabelFish protocol has its governance token, ticker $FISH. Not only will it allow its holders to vote on the direction taken by the protocol, but it will grant them a share of the revenue from yield farming activities.
The IDO will happen on Sovryn’s Origins Platform on the 26th of August 2021 with the following characteristics:
- 19,992,000 $FISH for sale (4.76% of total supply).
- Price: $0.11, priced in RBTC 48hrs before the sale.
- Purchase limit: $3,000 in RBTC.
Telegram community channel: https://t.me/BabelFishTalk
Telegram announcements channel: https://t.me/babelfishmoney
This article is for informational purposes only. It contains no financial advice. Always do your own research before investing in any crypto project.