With the launch of uUSDrBTC-OCT on UMA protocol it is now possible to leverage Bitcoin permissionlessly on the Ethereum network. You can mint renBTC from Bitcoin, then lock that renBTC into UMA. With this as collateral, you can mint uUSD, which can be used to purchase more renBTC and create a permissionless leveraged position.
Alternatively, you can farm by staking that uUSD you mint into the associated Balancer pool to yield farm three DeFi assets at once: $BAL, $REN, and $UMA.
uUSD is a “yield dollar.” The yield dollar model is described here. The first iteration backed by ETH has resulted in over 10mm in minted yield dollars backed by ETH (yUSD). The name has been changed to “uUSD” both to avoid confusion with other products as well as to stake a claim on the u-prefix for UMA.
renBTC was chosen in particular due to the fact that renBTC is the most popular and largest permissionless BTC-representing coin on the Ethereum blockchain. It is not being chosen at the exclusion of other possible BTC-representing coins in the future.
Permissionless Yield Farming with Bitcoin
Risk Labs and Ren will both offer farming rewards to users who contribute uUSDrBTC-OCT and USDC to the Balancer pool. The pool is whitelisted by Balancer, so farmers will receive all three assets: $REN, $UMA, and $BAL.
The pool will receive 10,000 UMA tokens per week, 25,000 REN tokens per week, and BAL tokens per Balancer’s calculations. Rewards are calculated every 256 blocks, so providing liquidity for even just a few hours will earn rewards. The APR depends on how much liquidity is provided over the entire week and is not possible to predict, only estimate. Each reward period is calculated and summed at 23:00 UTC every Monday. That week’s rewards will be airdropped approximately 24 hours after.
You can find the current APR for that moment by checking the yUSD Yield tab at tools.umaproject.org. It will run about 3 weeks and may possibly roll over into a new issuance.
- Wrap your BTC into renBTC so that it is usable on the Ethereum blockchain. To mint renBTC from native Bitcoin, go to RenBridge. Or, you can purchase renBTC on an exchange.
- Use renBTC to mint uUSD tokens on the UMA protocol. Use http://tools.umaproject.org.
- Deposit uUSD and USDC into the Balancer pool pool to earn BAL, REN, and UMA tokens
Follow steps 1–2 above, then use uUSD to purchase USDC in the balancer pool.
You can then swap your USDC for more renBTC, which will increase your exposure to the underlying asset of Bitcoin.
- Be careful when adding only USDC to the balancer pool. This will auto-purchase uUSD, which could be trading at a premium in that moment and be a net loss for you.
- Be aware that RenVM is currently at the beginning of phase sub-zero. This means the core devs have multi-key access to the nodes that run an audited sMPC algorithm securing the underlying assets in case of an emergency. Token holders should evaluate this consideration for themselves before using this product. Join the UMA discord for more discussion on this matter.
Appendix: UMA Token Details
- ERC20 Short name: uUSDrBTC-OCT
- ERC20 Long name: uUSDBTC Synthetic Token Expiring 1 October 2020
- Collateral: renBTC
- Collateral requirement: 125%
- Expiration: Oct 1, 2020
- Withdrawal liveness: 2 hrs
- Liquidation liveness: 2 hrs
- Price identifier: USD/BTC
- Note: this means 1 uUSDrBTC-OCT is redeemable for $1 of BTC at expiry
- Dispute bond (% of sponsor collateral): 10%
- Dispute reward (% of TRV): 20%
- Sponsor reward (% of TRV): 5%
- Min sponsor tokens: 100
- Identifier definition: USD/BTC, as spec’ed by UMIP-7
- Final fee: 0.018 renBTC