DefiDollar has a couple of usecases aimed at solving the problems stablecoins have. Among one of those usecases is the IbBTC (Interest bearing Bitcoin). In this article I will be explaining further on this product and how it helps in DeFi.
What is IbBTC?
IbBTC is the liquidity of tokenized BTC in DeFi. It is spread on Ethereum and has different types such as wBTC, renBTC, tBTC & sBTC. It is meant to bundle them together and build a yUSD equivalent for BTC that would become the default BTC denominated asset on Ethereum while enabling users to stack up more and fill their bags.
It is built in collaboration with BadgerDao. It solves the issue of not having a widely used interest bearing tokenied Bitcoin for DeFi.
How does it work?
Its quite simple, really.
The user journey is as follows:
- User Deposits Tokenized BTC into any of the following Curve Pools — renBTC, sBTC, tBTC
- The Curve LP tokens are deposited to the Badger Setts for Bitcoin yield
- The Badger Sett LP tokens are deposited to DefiDollar to obtain ibBTC
LP’s of the Badger Setts can proceed directly to Step 3 whereas others will need to follow the above mentioned steps.
How Interest is being made
Interest is generated for ibBTC from the underlying SETT & Curve pool yields :
- Curve pool trading fee
- Farmed CRV
- Farmed Badger
Badger Vaults harvests the Curve trading fees and CRV periodically in its Setts. The trading fees from Curve along with the farmed Badger and CRV are being transformed back into the underlying.
As an example: 100 ibBTC minted using 100 bcrvRenBTC where 1 bcrvRenBTC = 1.03 underlying BTC Therefore 100ibBTC = 100 bcrvRenBTC = 103 BTC
After a while, after interest starts to accrue and 100 bcrvRenBTC = 1.06 BTCThen the 100ibBTC will be worth 106 BTC
Please note that initially ibBTC will be collateralized with any of bcrvRenBTC, bcrvRenWBTC, b-tbtc/sbtcCrv.
DefiDollar in View
The collaboration with BadgerDAO that gave birth to ibBTC has greatly increased DefiDollar’s TVL, establishing it as a critical DeFi infra instrument. This has also sparked discussion about more such projects among DeFi’s top teams.
To roll out the interest-bearing Bitcoin solution on Polygon, there will be three stages to complete:
- Introducing the interest-bearing Bitcoin solution on Polygon with an incentive to leverage the BTC bridge.
- Build deep liquidity pools on SushiSwap for ibBTC/WBTC, creating cost-efficient swaps with Wrapped Bitcoin. This approach also gives way to optimal yield farming strategies involving BTC on Polygon..
- Future deployment of ibBTC after the Badger Bridge and Sett launches have been completed.
More About IbBTC
IbBTC aims to be composable and multichain. Theirgoal is to ensure ibBTC is integrated into other DeFi applications and protocols. To begin an additional Badger Sett vault for sushi ibBTC/wBTC LP will be incentivized that earns a combo of Badger, DIGG, and DFD.
It will be a native asset on widely used side chains. At launch, theywill simultaneously launch Setts on BSC and Polygon. These will be Pancakeswap and Quickswap pools with 100% auto compounding rewards — maximizing user’s potential yield!.
For more information check them at the links below :
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