Decentralized Finance (DeFi) has unlocked innovative financial models, yet it remains susceptible to significant risks, especially during market downturns. This article explores recent challenges faced by THORChain (RUNE) and Kujira (KUJI), analyzes synthetic asset models, and compares ENA’s approach to Maker’s DAI.
THORChain (RUNE): Collateral Risks and Debt Spiral
THORChain’s recent challenges highlight the dangers of relying on a native token as collateral. The protocol’s innovative lending model involves:
Collateral Conversion: Users deposit assets like BTC or ETH, which are sold for RUNE. By burning RUNE, the system aimed to keep its price up, which helped to offer loans without requiring liquidation, reducing risks for borrowers and encouraging them to keep their position.
Loan Repayment: When loans are repaid, RUNE is minted to repurchase the original collateral from the market.
What Went Wrong?
Market Dependency: RUNE’s price decline created a debt spiral. As liabilities exceeded the value of burned RUNE, minting more tokens caused further devaluation, undermining confidence.
Inflationary Pressure: The reliance on RUNE as both the collateral and liability instrument proved unsustainable during a bear market.
Lender Awareness: Many lenders likely did not fully understand how their assets were being used in this system, which underscores the importance of conducting thorough due diligence (DYOR) before participating in DeFi protocols.
This design reveals the vulnerabilities of self-referential token systems, particularly in volatile markets.
Kujira (KUJI): Governance and Operational Risks
Kujira’s collapse of operational funds due to on-chain liquidation underscores governance risks. The Kujira Foundation:
Leveraged KUJI: The Foundation used KUJI—primarily sourced from the protocol’s operational treasury—as collateral to secure loans.
Liquidation Event: Market volatility led to under-collateralized positions, triggering forced liquidation on its own platform. The price of KUJI plummeted, eroding investor confidence.
Connection with THORChain: Kujira has partnered with THORChain to explore a shared DeFi application layer, but the financial issues of both protocols highlight the need for robust collaboration and risk management.
Lessons Learned:
Collateral Management: Overleveraging native tokens can destabilize protocols.
Governance Transparency: Community-driven treasury management may reduce single points of failure.
From Collateral Risks to Synthetic Assets: Evaluating ENA (USDe)
Synthetic assets aim to bring stability and utility to DeFi ecosystems. ENA introduces a novel approach:
Mechanism: ENA creates a synthetic dollar by pairing long and short positions on perpetual markets.
Utility: ENA enables decentralized trading and hedging strategies while maintaining a stable synthetic asset for DeFi use cases.
Non-Self-Referential Model: Unlike systems such as Luna’s UST, ENA does not rely on its native token to stabilize its synthetic dollar, reducing the risk of a death spiral.
Governance and Utility of the ENA Token
ENA’s governance token serves multiple purposes within its ecosystem: Governance: Token holders can participate in decision-making processes, such as adjusting protocol parameters or introducing new features. Utility: Beyond governance, the token may be used for staking, rewarding participants, or providing incentives for liquidity providers, ensuring the protocol’s smooth operation.
Comparison with Luna
Luna’s UST relied on a self-referential model, where Luna was burned to mint UST, leading to catastrophic devaluation during market stress.
ENA avoids this by using a market-based approach where long and short positions balance each other, making it less susceptible to runaway feedback loops.
Risks in Bear Markets
Low Market Activity: During downturns, demand for long positions declines, reducing funding fees for shorts.
Sustainability: Without sufficient short incentives, the synthetic dollar could lose its peg, leading to instability.
ENA’s reliance on active market participation remains untested in prolonged bearish conditions. However, Ethena employs a robust risk management framework to ensure the stability of its synthetic asset, USDe. This includes strategies such as over-collateralization to mitigate liquidation risk, utilizing a delta-neutral approach to manage funding risk, and partnering with secure custodians for asset safety. Additionally, Ethena’s treasury backstop functions as a reserve fund to provide liquidity and support during market volatility, ensuring financial stability. These measures collectively strengthen the protocol’s resilience, protecting users from potential risks and market disruptions. It will be interesting to see how it performs during the next bear market.
Comparison: ENA vs. DAI (Maker)
Both ENA and Maker’s DAI represent synthetic asset models, but their mechanisms differ significantly:
Feature
USDe (ENA)
DAI (Maker)
Collateral Model
Long/short positions in perpetual markets.
Overcollateralized loans with crypto assets.
Stability Mechanism
Funding fees balance long and short positions.
Peg maintained via liquidation of collateral.
Bear Market Resilience
Vulnerable to low market activity and funding.
Stronger due to overcollateralization buffer.
Collateral Volatility
Relies on market activity for synthetic dollar.
Sensitive to collateral price fluctuations.
Adoption History
New and largely untested in bearish conditions.
Proven track record through multiple cycles.
Historical Context for Maker
Maker has demonstrated resilience through multiple bear markets. By leveraging overcollateralization and robust risk management, the protocol has successfully maintained DAI’s stability even during extreme market volatility, highlighting its maturity and reliability.
Utility and Governance of the Maker Token (MKR)
The Maker token (MKR) plays a vital role in the DAI ecosystem:
Governance: MKR holders vote on critical protocol decisions, such as adjusting collateralization ratios, introducing new collateral types, and setting stability fees.
Utility: MKR acts as a backstop for the system. In case of under collateralization, new MKR tokens can be minted and sold to cover the deficit, ensuring the stability of DAI.
This dual functionality ensures that MKR holders are incentivized to maintain the protocol’s stability and efficiency.
Key Takeaways:
ENA Strengths: Dynamic balancing of long and short positions introduces a new paradigm but is highly dependent on market activity.
DAI Strengths: Overcollateralization and automated liquidations make it more robust in adverse market conditions.
Conclusion: Navigating DeFi Risks
The challenges faced by THORChain and Kujira, along with the experimental nature of synthetic asset models, underscore the vulnerabilities in DeFi. Diversifying collateral types, implementing robust governance, and preparing for bear markets are essential to ensure long-term sustainability. Mitigation strategies such as building reserve funds, incentivizing liquidity, and introducing insurance mechanisms can help protocols navigate extreme conditions while maintaining user confidence. As DeFi evolves, the lessons from RUNE, KUJI, ENA, and Maker demonstrate the need to balance innovation with risk management, paving the way for a more stable and mature ecosystem.
Koii Network is a decentralized protocol focused on creating a scalable and community-driven infrastructure for the internet. By building the world’s largest supercomputer through a decentralized network of nodes, Koii provides a solution for developers, content creators, and node operators to earn rewards by offering computational power and decentralized hosting services.
Let’s dive into Koii’s architecture, its closest competitors, how it differentiates itself, its monetization strategies, and its potential.
Architecture of Koii Network
Koii’s decentralized structure is designed to simplify the launch of decentralized infrastructure and enhance the overall scalability of Web3 applications. The network operates on a combination of blockchain technology and peer-to-peer architecture, enabling diverse use cases.
Koii Nodes Koii Nodes provide decentralized hosting, computation, and validation of transactions on the network. Operators of Koii nodes contribute to maintaining the infrastructure and receive rewards for their participation. These nodes are crucial in offering reliable services for dApps and other decentralized solutions built within the ecosystem.
K2 Settlement Layer Koii’s settlement layer, called K2, is designed to facilitate the movement of value across the network. It anchors consensus mechanisms and supports decentralized applications (dApps) running on the Koii network. This layer utilizes Koii’s native token ($KOII) for transaction fees.
Developer Toolkit Koii provides a comprehensive Software Development Kit (SDK) to make it easier for developers to create fast, scalable, and private decentralized applications. The SDK allows developers to deploy dApps quickly while utilizing the decentralized hosting and computational capabilities provided by Koii nodes.
Proof of Real Work (PoRW) Tasks in Koii Network are validated using PoRW, a mechanism designed to ensure fair compensation for actual computational and hosting contributions.
Get Started with Koii Network
Turn any computer into a passive income generating node in 5 minutes. Join now. By following the link, you can download your node, access a full tutorial to get started, and, for a limited time, receive free $KOII tokens to begin your journey.
Closest Competitors and Differentiation
Koii Network faces competition from other decentralized infrastructure projects like Akash Network and Render Network.
Akash Network: A decentralized cloud computing marketplace allowing users to buy and sell computing resources.
Render Network: Focuses on decentralized GPU rendering, connecting artists with GPU owners to facilitate rendering tasks.
Arweave: Koii Network and Arweave cater to different aspects of the decentralized ecosystem. While Arweave specializes in permanent data storage with its unique Proof-of-Access (PoA) mechanism, Koii focuses on decentralized hosting, computation, and application development using Proof-of-Real-Work (PoRW). Koii’s flexibility is enhanced by its integration with IPFS and Filecoin for storage, making it more versatile than Arweave’s single-layer permanent storage model. Additionally, Koii’s lightweight nodes allow broader global participation compared to Arweave’s more hardware-intensive requirements. These differences make Koii ideal for hosting and computation tasks, while Arweave excels in long-term, immutable data archiving.
How Koii Differentiates Itself:
Versatility in Token Compensation: Unlike many DePINs (Decentralized Physical Infrastructure Networks), Koii allows any existing token to be used for paying node operators, offering flexibility in compensation methods.
Community-Driven Supercomputer: Koii envisions creating the world’s largest supercomputer powered by its community of developers and node operators.
Simplified Deployment: Koii’s network allows for faster and more standardized deployment of DePINs and altcoins, simplifying the process for developers.
Hybrid Infrastructure: Koii is designed to run on a combination of various storage solutions such as IPFS and Filecoin, which increases its overall adaptability.
Monetization Strategies with Koii
Koii offers several ways to earn within its ecosystem:
Node Operation
Koii Node: By running a Koii Node, individuals can participate in decentralized hosting and computational tasks. In return, they earn $KOII tokens as rewards. The node operation supports decentralized hosting and content validation.
K2 Node: Operators of K2 Validators validate transactions on the K2 Settlement Layer, ensuring the security and integrity of the network. These nodes also earn rewards for their critical role in the consensus mechanism.
Developing dApps
Developers can leverage Koii’s SDK to build decentralized applications (dApps). These applications can generate revenue through innovative use cases, such as decentralized finance (DeFi), NFTs, and decentralized cloud hosting.
Participating in the Koii Ecosystem
Engaging with the Koii community, contributing to projects, and supporting the growth of the ecosystem can open up additional earning opportunities. As the ecosystem expands, so too will the ways to earn rewards. Earn rewards by staking $KOII or engaging in ecosystem activities like development challenges or governance proposals.
Potential of Koii Network
Koii Network has immense potential, both in terms of technical infrastructure and its impact on the decentralization of the internet:
Lower Barriers to Entry: Koii provides an opportunity for anyone, from hobbyists to professionals, to become part of a global decentralized network. This is a significant shift away from traditional centralized cloud services.
Scalability: With its focus on a decentralized supercomputer and lightweight node requirements, Koii is set to scale globally, catering to a wide range of developers and content creators.
Interoperability: Koii’s support for multiple blockchains, like Filecoin and IPFS, ensures it is adaptable and can integrate into a variety of decentralized projects.
Community-Driven Innovation: By building a supercomputer powered by decentralized contributors, Koii can quickly evolve and adopt new technologies, making it an attractive platform for forward-thinking developers.
Challenges to Consider
Adoption: Gaining a sufficient number of developers and node operators to make Koii a self-sustaining ecosystem is essential. Without broad adoption, Koii could struggle to meet its goals.
Regulatory Landscape: As with any decentralized project, Koii faces potential regulatory hurdles that could impact the development of its infrastructure.
Competition: The decentralized infrastructure space is competitive, with Akash and Render already making strides. Koii must continue to innovate and provide unique value to stand out.
Conclusion
Koii Network represents a transformative step towards a decentralized internet. By enabling global participation and innovation, it is poised to empower a new generation of developers, creators, and entrepreneurs. Whether you’re running a node, building a dApp, or simply exploring Web3, Koii offers exciting opportunities to earn and shape the future of decentralized technology.
Would you like to participate in the Koii revolution? Visit koi.network to learn more. By following the link, you can download your node, access a full tutorial to get started, and, for a limited time, receive free $KOII tokens to begin your journey.
As AI bots and algorithmic trading increasingly dominate the financial markets, the landscape for technical analysis, chart studying, and market trends is undergoing a seismic shift. While human psychology (fear and greed) has traditionally been the driving force behind price movements, the rise of bots programmed for efficiency and precision is introducing a new paradigm. Let’s explore how AI-driven markets might evolve, the impact on trends, and what this means for traders.
The End of Human Psychology-Driven Patterns?
Current State:
Traditional chart patterns like head-and-shoulders or double bottoms are rooted in human emotions such as fear, greed, and euphoria. These patterns often reflect collective sentiment.
AI’s Impact:
AI bots operate based on predefined algorithms, not emotions. They respond to technical indicators, data streams, and statistical models rather than subjective feelings.
As bots take over a larger share of trading, these emotion-driven patterns may become less reliable, making it harder for traders to use them as predictive tools.
What Replaces Human Psychology?
Algorithmic footprints may become the new focus. Traders might study how bots behave under certain conditions—for example, liquidity zones where bots cluster orders or micro-arbitrage opportunities bots exploit.
Liquidity Challenges and the Rise of Stall Zones
The Liquidity Problem:
If most AI bots identify and act on similar patterns, they’ll likely place trades in the same direction, overwhelming market liquidity. When there isn’t enough counterparty volume, orders might remain unfilled or face significant slippage.
Stall Zones:
High algorithmic activity could lead to “stall zones” where price movements stagnate. Bots rapidly counteract each other’s trades, causing the price to oscillate within a narrow range instead of trending.
Implications for Traders:
Traditional breakout and momentum strategies may fail in these zones. Traders will need to adapt by focusing on longer-term trends or identifying when stall zones are likely to break.
Will Trends Disappear?
Consensus Concerns:
One concern is that AI bots reaching a consensus on price could eliminate trends altogether, as every move is countered almost immediately. However, several factors suggest this won’t happen.
Why Trends Will Persist:
Fundamental Drivers: Long-term trends are fueled by fundamental factors like economic data, earnings, and geopolitical events. Bots react to these inputs, creating trends based on new information.
Diverse Strategies: Not all bots are programmed the same. Some prioritize momentum, others mean reversion, and some focus on arbitrage. This diversity ensures imbalances still occur.
Liquidity Flows: Large institutions and whales often execute trades over time to minimize market impact. This sustained activity creates momentum, which bots amplify.
How Trends Might Change:
Slower and Smoother: AI consensus could lead to smoother, less volatile trends.
Shorter and Fragmented: Bots’ rapid reaction times may compress trends, making them shorter-lived.
Sector-Specific Trends: Instead of broad market trends, sector-based or niche trends (e.g., AI tokens or DeFi projects) might dominate.
The Rise of Algorithmic Patterns
What Replaces Traditional Patterns?
Instead of human-driven patterns, traders may focus on identifying algorithmic behaviors such as:
Liquidity Zones: Areas where bots cluster orders.
Volume Clustering: Concentrated activity around key levels.
Flash Reversals: Sudden moves caused by bots reacting to each other’s trades.
Tools for the Future:
Heatmaps, depth-of-market visualizations, and real-time flow analytics will become essential for understanding these patterns.
The Feedback Loop of AI Competition
AI vs. AI Dynamics:
Bots compete with one another to maximize efficiency. This creates a dynamic where:
Some bots attempt to front-run others by predicting their actions.
Others deliberately disrupt patterns to trigger stop-losses or liquidations.
New Opportunities for Traders:
Traders could exploit these interactions by studying how bots influence each other and identifying predictable behaviors.
Strategies might include observing “liability traps” or “fake breakouts” caused by bots manipulating liquidity.
Reduced Emotional Volatility, But Not Risk-Free
Less Emotional Overshooting:
With bots driving trades, markets may experience less emotional overshooting (e.g., panic selling or euphoric buying).
New Risks:
Flash Events: High-frequency bots can still cause flash crashes or flash rallies when liquidity dries up.
Amplified Noise: Increased noise from rapid-fire trades could make it harder for traders to identify genuine signals.
The Role of Fundamental and Narrative Drivers
Why Fundamentals Still Matter:
Major trends driven by technological innovation, macroeconomic shifts, or policy changes will continue to influence markets.
Bots react to these factors, ensuring that long-term trends persist even in an AI-dominated market.
Narratives and Themes:
Sectors with strong narratives (e.g., AI, green energy, or DeFi) will attract liquidity, creating trends that bots amplify.
Conclusion: Adapting to an AI-Driven Market
While AI bots and algorithmic trading are transforming the markets, they won’t eliminate trends or trading opportunities. Instead, they will reshape how traders approach the market:
Traditional chart patterns may lose reliability, but new algorithmic patterns will emerge.
Trends will persist but may become slower, smoother, or shorter-lived.
Stall zones and liquidity dynamics will require traders to adapt their strategies.
New tools and methods will be essential, such as tracking bot behavior and liquidity flows.
Ultimately, the traders who succeed in this new landscape will be those who embrace the changes, study the behaviors of AI-driven markets, and develop strategies to navigate this evolving ecosystem.
Resolv.xyz is a new player in the decentralized finance (DeFi) ecosystem, offering users innovative ways to manage and secure their digital assets. Designed with a focus on transparency and efficiency, Resolv.xyz aims to address some of the core challenges faced by DeFi users today, including security, liquidity, and accessibility. Additionally, its enticing airdrop campaign makes it a prime choice for users seeking to capitalize on early adoption rewards.
How Resolv.xyz Works
At its core, Resolv.xyz operates as a decentralized protocol designed to facilitate the resolution of on-chain assets. It employs smart contracts to ensure that transactions and asset management are secure and transparent. Users can interact with Resolv.xyz to lock their assets in escrow-like contracts, enabling trustless agreements between parties. By leveraging cross-chain interoperability, Resolv.xyz allows users to seamlessly transact across different blockchain networks, making it a versatile tool for DeFi participants.
Understanding USR: Resolv.xyz’s Stablecoin
A key feature of Resolv.xyz is its native stablecoin, USR, which is designed to maintain price stability and provide a reliable medium of exchange within the platform. Similar to DAI, USR is backed by collateral, but Resolv.xyz currently uses ETH exclusively as collateral. Users lock their ETH into smart contracts, which then mint USR tokens based on a collateralization ratio. This ensures that USR remains overcollateralized, reducing the risk of devaluation. In the event of significant price drops in ETH, the platform employs automated liquidation mechanisms to maintain the stability of USR. This approach mirrors DAI’s model but simplifies it by focusing solely on ETH as collateral, streamlining the process for users.
The Airdrop Opportunity
Resolv.xyz’s airdrop campaign is currently ongoing, offering early adopters and active participants a lucrative opportunity to earn tokens. To qualify for the airdrop, users can perform actions such as holding assets in the platform, minting USR, or engaging in specific ecosystem activities. These rewards are designed to foster community growth and incentivize active involvement. With clear eligibility criteria and a transparent distribution process, the Resolv.xyz airdrop is a golden opportunity for users looking to earn while exploring the platform’s innovative offerings.
How to participate in the airdrop
1- Follow the link to signup with your wallet, review the terms and conditions, and if you agree, proceed to sign with your wallet. The signature is gas free.
2- You are then redirected to you points dashboard. From there you can see all the strategies to obtain points and the multipliers for each strategy. The easiest way is to hold USR token.
3- Click on “View all” to view all the possible activities. You have the choice to participate on Ethereum network or one the Base network to save on fees.
4- Click on “Start earning” in “HOLD USR” activity to swap USDC/USDT/USDE/DAI to USR.
5- If you want to convert other tokens to USR, you can use your favorite DEX (jumper.exchange, sushi, uniswap, aerodromt) to swap from any token to USR. However, make sure you pick the right token by validation the address.
6- Once you have USR tokens, you can supply them to liquidity pools on pendle, aerodrome, curve and much more. Explore all the possibilities in the activities section and choose the on that is right for you. One of the possibilities is to deposit in the USDC/USR stable pool on aerodrome.finance
Comparison with Anzen Finance
When comparing Resolv.xyz to Anzen Finance, a well-known name in the DeFi landscape, several distinctions stand out. While both platforms prioritize user security and decentralized governance, Resolv.xyz distinguishes itself with a more streamlined interface and a unique suite of tools designed for efficient asset resolution. Unlike Anzen Finance, which focuses heavily on risk-adjusted returns and insurance-backed strategies, Resolv.xyz emphasizes seamless interoperability across chains and simplified user onboarding, making it a more versatile choice for both novice and experienced DeFi enthusiasts.
Total Value Locked (TVL)
An important indicator of Resolv.xyz’s growth within the DeFi community is its Total Value Locked (TVL). While the platform’s TVL shows positive growth, reflecting increased user confidence and participation, it’s worth noting that this metric should not be taken as the sole measure of a platform’s success. DeFi users are encouraged to evaluate TVL alongside other factors, such as the platform’s underlying mechanisms, risk management, and community engagement.
Risks
While the opportunities presented by Resolv.xyz are enticing, it’s crucial to acknowledge the inherent risks associated with DeFi protocols. Smart contract vulnerabilities, market volatility, and potential regulatory challenges pose significant risks to users. Additionally, as a relatively new platform, Resolv.xyz may face hurdles in maintaining security and scalability as it grows. Users are advised to perform thorough research and only invest funds they can afford to lose, keeping in mind the unpredictable nature of the DeFi ecosystem.
Conclusion
Resolv.xyz represents an exciting development in the DeFi world, offering innovative solutions and attractive opportunities for users, particularly through its airdrop campaign. With its user-centric stablecoin USR and a clear focus on fostering community engagement, the platform is poised for further success. However, prospective users should remain cautious and well-informed about the risks before diving in. By striking a balance between enthusiasm and diligence, Resolv.xyz participants can maximize their gains while navigating the evolving DeFi landscape effectively.
Bob Network is a Layer 2 scaling solution for Bitcoin that enables faster, cheaper transactions and advanced features like smart contracts while relying on Bitcoin’s base layer for security. Recently, Bob became a Babylon-secured network, leveraging Babylon’s system that taps into Bitcoin’s hash power to enhance security for Bitcoin-compatible chains. This integration also supports the ecosystem of Bitcoin Liquid Staking Tokens (LSTs) by providing a secure foundation for staked Bitcoin to interact with decentralized applications, ensuring both liquidity and the robust security of the underlying asset.
You can find more information about Bitcoin Liquid staking in our previous article. This article will provide a step by step tutorial on how to participate in the last season for farming BOB layer2 and likely getting qualified for the Airdrop. The focus will be more for Ethereum familiar users.
If you hold Bitcoin and wish to bridge it to BOB, you can connect your Bitcoin wallet. For this tutorial, however, we’ll focus on bridging Ethereum assets from other Layer 2 networks such as Base or Linea.
Add the BOB Network to Your Wallet:
Add the BOB network to your wallet by following the on-screen instructions.
Sign a message to confirm (this step does not require gas fees).
Access the Welcome Page:
After successfully connecting your wallet, you will be redirected to the welcome page.
Click on “Start Harvesting” to begin. Superchain users will receive bonus points.
Step 2 – Intract quests
Complete quests on Intract. This step is optional, but it might help for the airdrop.
Navigate the BOB dashboard via the menu bar in the top-right corner, where you’ll find:
Fusion: Your personalized dashboard.
Bridge: Access native and third-party bridges to move assets to the BOB network.
Apps: A directory of apps available for farming points and interacting with the ecosystem.
Stake: A one-click staking solution to get LSTs (liquid staked bitcoin).
Multipliers: You can view the points multipliers for each asset. Bitcoin LSTs offer the highest multipliers, making them the most rewarding option. However, if you prefer, you can keep your assets in Ethereum or USD and still participate.
Step 4 – One-Click BTC Staking
Stake Bitcoin seamlessly by clicking on the “Stake” button to acquire Bitcoin LSTs. To proceed, connect your Bitcoin wallet and bridge your Bitcoin to your BOB EVM wallet, selecting your preferred LST. Each LST allows you to earn points in its respective project, with many also contributing to your Babylon points balance. For a detailed step-by-step guide, follow this guide.
Step 5 – Bridge assets from Ethereum L2
If you don’t have a Bitcoin wallet, you can bridge assets from Ethereum instead. Use the BOB native bridge for transfers from the Ethereum mainnet, or opt for a third-party bridge to move assets from a Layer 2 network. You can use 0xastra, owlto or any other bridge that is supported. Choose the option with the lowest fees
Bridging 0.1 ETH from Base to the BOB chain costs approximately 0.00039 ETH on 0xastra. If you’re bridging from Arbitrum, you also have the option to bridge WBTC directly, providing more flexibility.
You can keep ETH on the BOB network and use it to provide liquidity. However, note that the multiplier for points is lower than that of Bitcoin LSTs. In this guide, we’ll convert ETH to Bitcoin LST and use it in DeFi strategies, but you can choose the asset that aligns with your preferences. You’re not obligated to follow our strategy.
Step 6 – Review you strategy
Review the strategies outlined in the BOB dashboard to optimize your points and familiarize yourself with the available apps.
Step 7 – Convert ETH to solvBTC
If you didn’t bridge WBTC directly to the BOB network, you’ll need to first convert ETH to WBTC, as there’s currently no direct route from ETH to SolvBTC.
We used izumi.finance to convert ETH to WBTC, but you can use any DEX listed in the BOB apps directory.
Once your WBTC is ready, visit solv finance on the BOB network to convert it to SolvBTC.
From the menu, select SolvBTC, ensure you’re on the BOB network, and complete the conversion from WBTC to SolvBTC.
Leverage SolvBTC in DeFi:
With SolvBTC, explore DeFi opportunities to maximize your points. Start with platforms like Pell Network and Segment Finance, or check the full list of supported apps in your Fusion dashboard.
Step 8 – Pell network
Pell network is a restaking platform, similar to Eigenlayer or Karak on Ethereum. It supports assets on BOB, including SolvBTC, and offers opportunities to earn Pell and Solv points. Restaking SolvBTC is straightforward and benefits from BOB’s low gas fees. Additionally, Pell’s airdrop campaign provides exposure to multiple rewards.
Here are the assets supported for BOB. You can restake the SolvBTC we just acquired in step 7.
Step 9 – Segment finance
Segment Finance allows you to supply assets and borrow against them. You can loop borrowed assets back into your supply to maximize returns.
After connecting, visit the Segment dashboard to explore pools and see the points earned when supplying SolvBTC.
Supply your SolvBTC, enable the collateral toggle, and borrow SolvBTC while staying within safe limits to avoid liquidation. Repeat the process based on your risk tolerance.
Finally, review your account to ensure your net APR is as expected and you are compliant with all risk parameters.
You can supply ETH and borrow Bitcoin LRT assets such as uniBTC, LBTC, or SolvBTC against it. This allows you to obtain Bitcoin LRT without swapping your ETH. However, since ETH and BTC are not correlated, you will need to actively monitor price movements to avoid liquidation.
Step 10 – BedRock LST
You can convert your WBTC to BedRock’s LSTuniBTC. This will help you get Babylon points and Bedrock Diamonds while getting Bob points too.
Follow this link and stake your WBTC to uniBTC. Make sure you are on the BOB network. Be careful, the unstake feature is not available yet. You can always swap them to other assets using oku.trade with some price impact (step 11).
Once you receive your uniBTC, you can go to Pell network (Step 8) to restake them or Segment finance (Step 9) to lend them. You could use them in any other DEFI app.
Here is the restaking asset uniBTC on Pell network. Always make sure you are on the BOB network.
It is important to note that unstaking from Pell has a 7 days pending period. Withdrawal from Segment is instant if you repay enough debt to cover the liquidation threshold.
Step 11 – Provide liquidity to a DEX
You can go to oku.trade to swap you ETH or WBTC directly into a Bitcoin LST. Make sure you are on the BOB network. You can choose between SolvBTC.BBN, uniBTC or LBTC. They have the best multipliers for BOB points.
Once your Bitcoin LST is ready, you can provide liquidity to a pool. Bitcoin-backed LST pairs generally carry a lower risk of impermanent loss, as long as they remain pegged to Bitcoin. However, always review the associated risks, including potential depegging events. Make sure you choose a pool that has a good amount of liquidity.
Go to “Position maker” and choose a pool:
In this case, we chose uniBTC / SolvBTC.BBN. Select your desired range, add the liquidity amounts and click on Deploy position.
Once submitted, you can view your positions:
You can always restake or lend your SolvBTC.BBN, uniBTC or LBTC to Pell network (Step 8) or Segment finance (Step 9) allowing you to accumulate additional points in those platforms.
Step 12- Ongoing Management – Fusion Dashboard
Regularly check your Fusion dashboard for updates, new quests, and performance metrics. Adjust your strategy to maximize points and rewards depending on each app’s performance.
Understanding the risks
Farming on BOB involves multiple layers of complexity and risk. Your Bitcoin, originally on the Bitcoin mainnet, is now wrapped in multiple smart contracts and represented as a Bitcoin LST (e.g., SolvBTC) on BOB. These layers, secured by Babylon or other protocols, are exposed to potential bugs or vulnerabilities. Any issue in these contracts could lead to severe asset loss. Additionally, Bitcoin’s price volatility and your long-term holding strategy should also be considered. Only invest what you are ready to lose, conduct thorough research, and stay informed about potential risks.
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