Improvements
Improving on previous models
Last updated
Improving on previous models
Last updated
The Peapods Finance model brought the idea of volatility farming into popular imagination. Inspiring many other protocols to follow suit and create instruments that create yield out of volatility. However, non rewards token TVL takeup has not been growing fast enough to suggest that the protocol has been able to meaningfully capture the arbitrage profits from other tokens.
One core reason would be the difficulty for arbitrageurs to calculate and perform arbitrage opportunities for Pods which consist of increasingly more complicated Token compositions. As such, the flywheel can break. Less interested Arbitrageurs in new pairs, leads to a lower APR for the Pod, leading to new Pods being disincentivised from being formed.
The RIBBIT Arb vault is a smart contract vault. Depositors will stand to gain profit in terms of RIBBIT, when an Arbitrage strategy is activated.
RIBBIT ARB Vault makes it easier to bootstrap the formation of new increasingly complicated PADS with more exotic token compositions. Community members will now be able to easily become arbitrageurs themselves, enjoying yields that were previously difficult to capture; This makes it more easy to ensure that there will be a ready stream of funds that can deploy to bring the value of exotic token compositions in PADS closer to its par value.
Simply put, more PADs will now be able to reliably secure greater yields since the Arbitrage activity between themselves and the par value of their tokens will happen more reliably. This would in turn attract more depositors, swelling TVL, increasing the depth of arbitrage. In summary, RIBBIT token will experience ever increasing buy pressure as more tokens are being bought back and distributed as yield.
The Arbitrage Vault also natively increases buy pressure for RIBBIT. Profits generated from arbitraging between PAD tokens and its par value will be distributed in the form of RIBBIT to depositors within the vault. Profits exceeding the principle of the deposit will be used to buyback RIBBIT from the market and distribute them proportionally to depositors.
RIBBIT Finance will introduce a proprietary new incentive program to attract the creation of fresh PADs; The program will feature tokens with high volatility and volume in order to generate more buyback volume of RIBBIT.
Protocol Fees, earned through fees charged in accordance to arbitrageur volume will be distributed to PADs which contain featured tokens.
