Introducing 3pool — the Inaugural Stablecoin Pool Powering the Kusama Ecosystem
*This post has been updated on 6/13/2022 12:00 UTC to reflect the addition of 3pool incentive schedule.
tl;dr
- 3pool on Karura is the first stablecoin pool powering the Kusama ecosystem
- 3pool is composed up of aUSD, USDC, USDT
- A first of its kind incentive proposal to bootstrap 3pool with 20,000 KSM subsidy from the Kusama Treasury will be used to incentivize 3pool for 52 weeks
- In terms of distribution of the KSM subsidy, Proposal 2 recorded the most votes where 50% of the subsidy will be distributed in LKSM and 50% will be distributed in taiKSM
- aUSD, TAI and KAR will be allocated to 3pool as additional incentives to incentivize LPs
- 3pool on Karura is one of the best incentivized stablecoin pools
taiKSM has showcased Taiga Protocol’s capabilities in facilitating highly efficient swap between uniform assets (KSM-LKSM). Credit to our Stable Asset system, the same trading capabilities can be seamlessly applied to stablecoin liquidity pools.
With months of preparation alongside Acala/Karura and Wormhole, we are thrilled to reveal the highly anticipated stablecoin 3pool on Karura.
Benefits
3pool on Karura is composed of Tether (USDT), Circle (USDC) and Acala’s aUSD. It serves as the very first stablecoin pool in the Kusama ecosystem with the goal of providing benefits for the following users:
Liquidity Providers
LPs can earn competitive fees by providing stablecoin liquidity of choice. Fees are composed of:
- Swap and redemption fees
- aUSD incentives from Acala treasury
- KSM incentives from Kusama treasury council
- TAI incentives from Taiga treasury
Traders
Stablecoins are one of the most heavily traded assets by volume. Traders often look for arbitrage opportunities in stablecoin pools. By introducing 3pool on Karura, Traders can seek profits by replicating their arbitrage strategies while helping 3pool to stay balanced. Furthermore, as adoption for aUSD continues to increase, this will create a natural demand for dApp users to swap between stablecoins.
Project Teams
Whether it’s a DeFi, GameFi or NFT marketplace, the demand for stablecoin liquidity to power decentralized application is imminent. 3pool can be implemented as the underlying swap engine for dApps building on Karura.
Parachains
3pool on Karura marks the inauguration of the first stablecoin liquidity pool being integrated as the default liquidity engine on a Parachain. This integration can be replicated on other Parachains since they can leverage the stable asset system as the default DEX engine to facilitate stablecoin swap transactions.
Driving aUSD Adoption
With the recent announcement of the 250M aUSD fund, Acala is pushing towards the adoption of aUSD as Polkadot and Kusama’s native decentralized stablecoin. The goal of aUSD is to become the most useful and secured form of decentralized stable currency in the Dotsama ecosystem.
Aside from the native minting function of aUSD on Acala/Karura, we foresee a significant demand for aUSD as more applications go live. This could also be a driver for stablecoins such as USDT and USDC to enter the Polkadot ecosystem, creating a natural demand for stablecoin swap transactions.
3pool Incentive Schedule
As decided by the community, Proposal 2 received the most votes where 20,000 KSM subsidy will be distributed in the form LKSM and taiKSM in equal proportion. The complete proposal options and summary can be found here.
With the added KSM subsidy, 3pool on Karura is one of the best incentivized stablecoin pools across all networks. LPs will enjoy a well balanced mix of incentive tokens and protocol fees by contributing liquidity to 3pool.
Proposal 2 (50% LKSM, 50% taiKSM)
Advantages
- balanced mix of yield tokens received by LPs
- LKSM and taiKSM incentives can be used in collateral staking to further unlock yield
- second highest overall projected yield amongst all proposals
- 50% of LKSM plus 35% of the underlying composition of taiKSM will be in the form of LKSM, totaling to 85% of the subsidy will be in the form of LKSM, which provides further security to the Kusama network
- less supply shock on KSM relative to directly distributing the full subsidy in LKSM
Proposal 2 offers a well balanced mix of incentive tokens including:
- 2,500,000 TAI
- 260,000 KAR
- 20,000 KSM distributed in 50% LKSM and 50% taiKSM
- LKSM will further accumulate yield in LKSM
- taiKSM will further accumulate yield and protocol fees
Additional Notes
- Review of distribution mechanism every 4 weeks OR every incremental increase in TVL of USD 5M
- Review of incentives schedule every 4 weeks
Power of Taiga’s Stable Swap
Traders can benefit from Taiga’s stable swap engine, enabling low slippage transactions which allows traders to minimize cost. Taiga protocol has demonstrated the efficiency of the stable swap engine in the recently launched taiKSM pool.
How it Works
With the recent launch of aUSD and Wormhole’s integration with the Karura network, Taiga Protocol will primarily facilitate stablecoin swaps between aUSD, USDC and USDT.
USDT and USDC are two of the most widely adopted and largest stablecoins in terms of market capitalization, totaling to over USD 125B*. With the arrival of USDT and USDC to Dotsama, 3pool on Karura is positioned to become the main decentralized liquidity engine servicing LPs, Traders, Project Teams and Parachains.
*The market capitalization of USDT and USDC is sourced from Coingecko as of 5/28/2022.
USDC will be bridged across through Wormhole, while USDT will be minted natively on Statemine, a common good Parachain on Kusama.
Learn more on how to participate in 3pool
Resources
About Tapio & Taiga
Tapio is a synthetic asset protocol enabling efficient liquidity for staking, crowdloan and uniform assets. It is designed to remove liquidity silos by synthesizing different formats of derivatives into a highly usable synthetic asset on Polkadot. Taiga is the mirror implementation of Tapio on Kusama.
Tapio officially started in early 2021 when we received our first Web3 Foundation Open Grant. We are also the inaugural recipient for the Acala Ecosystem Grant. Our team is composed of engineers, financiers, security experts and serial entrepreneurs based in Canada, China and U.S.
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