How to Exponentially Deepen PolyCUB Liquidity

avatar of @leofinance
5 min read

One major issue facing POLYCUB is a lack of trading liquidity. Right now, there is only about $330k in liquidity for anyone who's trading POLYCUB.

This has led to some cascading effects - especially with the airdrop still ongoing. The airdrop is releasing over 16k new POLYCUB every single day. With the airdrop ending on May 4th along with the POLYCUB halvening from 1 POLYCUB / block to 0.5 POLYCUB / block, we're going to see a dramatic reduction in the amount of POLYCUB hitting the market.

This is likely to have a beneficial impact - as a large % has been dumped onto the market from the airdrop. The hard fact remains that a lack of liquidity for POLYCUB is what has caused such a cascading impact on the price.

POLYCUB is designed to be a super sustainable, long-term yield optimizer platform. We've built mechanics to ensure this in a wide variety of ways. What happens between here and there can be a bumpy ride - as we've seen.

PolyCUB V2: A Full 180 Degree Turn in Vault Dynamics

The new POLYCUB V2 vaults have been discussed a few times. The name can be slightly confusing - this V2 deployment is not a migration of any existing POLYCUB vaults. Instead, it is the deployment of a new style of vaults that we haven't seen anyone in the DeFi landscape tackle.

The first of these vaults was pHBD. pHBD was a bit of a trial run for us. We wanted to see just how much value could be accrued for the protocol liquidity. It turns out, quite a lot.

The protocol liquidity is earning several thousands of dollars per month from pHBD and that is with a pHBD-USDC Liquidity Pool of only $323k. We believe this number will grow exponentially in the future - as it is already growing steadily each and every day. Now, thousands of dollars in value will be used to buy POLYCUB on the open market through the following methods of value accrual:

  • pHBD - native HBD held as 1:1 collateral for the wrapped equivalent - staked on the Hive blockchain earning 20% APR = value accrual for PolyCUB's PoL
  • pHBD 0.25% wrap and unwrap fee = value accrual for PolyCUB's PoL
  • pHBD cross-chain arbitrage = value accrual for PolyCUB's PoL
  • pHBD-USDC LPs need to buy more POLYCUB to stake as xPOLYCUB to control governance and drive pHBD-USDC vault yield higher

Our next vaults that will be deployed are:


After that, we'll start to show you some crazy stuff (pRUNE, anyone?).

This is why we're calling this move a complete 180 degree turn in the direction of PolyCUB. Right now, we have a certain vault setup with Kingdoms that we've learned isn't nearly sustainable enough. With the new vaults, we're pairing all new asset listings against POLYCUB. This means that pHIVE is paired with POLYCUB, pSPS is paired with POLYCUB, pRUNE is paired with POLYCUB.

What's at the center of this? Liquidity.

With each new vault launch, there's a new pairing against POLYCUB. That means that every single dollar that gets pooled on the platform in one of these vaults is generating deeper liquidity for the POLYCUB token while simultaneously driving monthly revenue into PolyCUB Protocol Liquidity which ultimately buys POLYCUB and distributes it back into the daily rewards pool for LPs.

After spending a lot of time researching the economics of POLYCUB and how the rollout has performed, we realized that "V1 Vaults" (the original Kingdoms vaults, etc.) on PolyCUB don't generate enough value. Each $1 that enters one of those vaults is earning yield and not providing enough value to cover that yield generation for the protocol at large.

The new vaults generate value capture for the PolyCUB platform through 5 methods. These methods mean that ever $1 that enters the platform generates more long-term value for the platform than the yield it pays out. This is possible thanks to value capture, collateralization and perhaps the most important; ever-deepening liquidity for POLYCUB trading:

  • insert_hive_asset (i.e. pHIVE or pSPS, etc.) - held as 1:1 collateral for the wrapped equivalent - staked on native platform (i.e. HIVE POWER or SPS staking on = value accrual for PolyCUB's PoL
  • insert_hive_asset 0.25% wrap and unwrap fee = value accrual for PolyCUB's PoL
  • insert_hive_asset cross-chain arbitrage = value accrual for PolyCUB's PoL
  • insert_hive_asset-POLYCUB = utility for people to buy POLYCUB to LP against - their insert_hive_asset = value accrual for PolyCUB's PoL
  • insert_hive_asset-POLYCUB holders need to buy more POLYCUB to stake as xPOLYCUB to control governance and drive insert_hive_asset-POLYCUB vault yield higher

The Ever-Deepening Liquidity of POLYCUB

This marks a complete 180 degree turn in the direction of POLYCUB. Instead of offering Kingdoms - which only accrue value for PolyCUB PoL through 1 method (management fees) - we're deploying Vaults V2 - which accrue value for POLYCUB through 5 methods (staking collateral, wrapping fees, internal arbitrage, lp utility, governance control).

This leads us to some incredibly important effects. With all of these new vaults, each will be paired against POLYCUB. This means that effectively, the launch of every single new vault will lead to more trading liquidity for POLYCUB on the Polygon network.

As liquidity builds, stability builds with it. The crazy part is that as liquidity builds sustainability also builds with it. This is thanks to those 5 value accrual methods. As more liquidity gets added, more trading volume occurs. As more trading volume occurs, more liquidity gets added due to deepening incentives. Black hole theory, anyone?

On top of all this, the Protocol Owned Liquidity will be earning massive value accrual from these vaults and all of this value accrual will deliver permanent liquidity which ultimately feeds black hole theory even further.

The Future of PolyCUB

The future of PolyCUB is looking a lot brighter under this model. We just released xPOLYCUB Governance last week which was a key step in the path to this change. We needed governance to be live in order to give the community the keys to the kingdom and allow them to control the yield dynamics.

Having the community control the yield dynamics with stake-weighted voting based on xPOLYCUB stake and then releasing a dozen vaults for Hive-based tokens to get listed on PolyCUB is transformative as well. This will create a struggle for control over which vaults should earn the most yield.

Splinterlands community may battle with the LEO community who may battle with the CTP community who may battle with the HBD community to acquire more xPOLYCUB stake and vote up their own vault in the governance system.

*pHIVE is coming VerySoon, get your liquid HIVE ready in the next 48 hours!

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