ITHACA-IPANEMA 2 INJECTED: Why LB is actually a great thing! (and it's tzBTC that's the problem)

I agree, USDC would be a much better alternative. But we can use the escape hatch to exit usdtz when the time comes(I still don’t like the escape hatch though…). There is no exact date for USDC integration now and we really need a stablecoin pair with decent liquidity. Also, seeing a community lead proposal win the vote would be a huge leap forward for Tezos.

My question was more to Kevin and the Tezos Stable Foundation. I want to know if he and his company/foundation would be willing to support USDC integration.

I, personally, am in favor of tzBTC based liquidity baking. I have read your many arguments against it, and I respect your right to an opinion, but I disagree with your opinion for the same reasons Arthur does.

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Well, another narrow miss. Now that you’ve prepared the proposal, it could be injected more quickly in a possible future round (in case the quorum in the present round is not reached).

I asked this question in multiple twitter threads during the last proposal and never got an answer.

What exactly happens to the existing LB contract / liquidity if its switched to another token

  • Do these funds remain in the current contract, and a new LB one is launched?
    • Does this require all the apps currently integrating it, to support both contracts? (so that users can withdraw their funds and move to the new one)
    • How will app developers be made aware of both addresses (currently the LB contract address is a constant)
    • Have you spoken to app developers that have already integrated it, to make sure they are prepared to make all necessary changes to support both?
  • Do the existing funds get converted, or returned to LB providers in some way?
  • Will LB providers suffer losses due to the change?
    • If so, is there any plan to compensate for such losses?
  • etc

Thank you! and yes you are correct. fixed! :slight_smile:

Actually USDC can go into the USDtz reserve. Literally any and all USDC liquidity can be collateralized to mint USDtz. So can BUSD, GUSD, PAX.

The only friction point for some is streamlining so people can go from cash to USDtz seamlessly which we’re working on. Thus far though getting USDC to use as collateral has not been a hindrance for anyone.

USDC technically is already on Tezos through wUSDC, though it circumvents KYC/AML compliance which is a major hesitation for institutional investors and commercial participants. Even still, not that much wUSDC liquidity remains after farms dried up so USDC coming on Tezos directly is not some game changer people think it is.

Thanks for your comment and I appreciate you recognizing the changes that were made.

As for USDC, see this reply. Why LB is actually a great thing! (and it's tzBTC that's the problem) - #13 by KevinMehrabi

Quorum was reached but it did not achieve the supermajority. We will be re-injecting Ipanema. However it’s not a simple re-injection. Some improvements/bug-fixes to my understanding were made on the upstream version of Ithaca. So we will be amending that and injecting the new amended version.

I’m sorry you never got an answer. I do my best to cover a lot of ground on many mediums, but I do miss some.

To answer your questions:

  • The existing liquidity remains, but the subsidy ends

  • We will tell them about the new contract.

  • Yes and also there would be more apps coming as a result of this. I have not seen more than 2 apps that integrated this version and I can’t speak too much for their success.

  • Again, the funds remain in place, only the subsidy ends

  • The funds remain in place

I corrected this after I saw it 2 weeks ago, to clear that bit up :slight_smile:

Please correct me if I’m wrong, but Americans are screwed if they get stuck in tzbtc if LB gets cancelled. Unless they can have a friend do KYC with one of the gatekeepers for them.

Will there be legal entities from which institutional and other bigger investment entities could buy USDtz upon injection of your proposal?

If the escape hatch is triggered, or its voted against, it only stops the subsidy. The contract and its pools remain, allowing people to withdraw their liquidity and/or swap tzBTC for XTZ or vice versa.

There are also pools on Quipuswap, SpicySwap and PlentySwap (maybe others too) for tzBTC. Most likely the liquidity would be removed from LB and be added to these others instead, as liquidity providers can still earn returns there. I don’t think theres any situation where anyone would be “stuck”

Yes, but try pulling out 300k out of LB when the LP goes down to 2mil.

Then trading the tzbtc for Tez on Quipu/Spicy/Plenty. Slippage will hurt for those who pull out last, and the only ones who can take advantage of this are people who can mint tzbtc (passing KYC for Americans is a NG for all the gate-keepers, even bitpanda exchange ).

Slippage is a setting controlled by the user, at the time they perform a trade. The user can input whatever slippage rate they choose too, they won’t perform a trade and then find out afterwards that the slippage was +5%.

I don’t claim to be an expert in Dex’s, but i’m well aware “Impermanent loss” is a risk you take with any dex (LB, Quipu, Spicy, Plenty etc). I’m suffering it on 1 pool on Quipuswap at the minute for some time and have been waiting for it to go back up.

The LB subsidy offsets IL with a constant stream of incoming funds, not reliant solely on transactions fees to generate returns like other dexs. This makes it less of a risk than others. If you’ve been in LB for a long time and been getting higher than the current 60% APR, I would expect to see little issue with LB withdrawals. Prices on other exchanges would likely fluctuate initially, but with support on multiple dexes, any opportunity for arb opportunities will likely have the prices return back to normal relatively quickly

I’m saying, liquidity will go down when the tzbtc sunset ends in Feb/March. So people will withdraw their LP and trade to tezos if they can. USA peeps will be stuck with TZBTC in their wallet so they will try to trade for XTZ, and there might be a lot of people who need to exchange tzbtc for XTZ meaning someone who can get kyc with the gatekeepers could make a lot off of the arbitrage in this mess.

stuck with TZBTC in their wallet

I don’t believe that the liquidity will simply leave LB and then disappear. As I mentioned above there are other exchanges that accept this. If LB is drained, liquidity holders will likely put their liquidity back into the other dexs to earn rewards. These dexs run off transaction fees, so a large number of people looking to swap would be attractive to liquidity holders, while they hold onto tzBTC. Which should keep the prices up.

People also hold onto tzBTC for other reasons than to be part of LB. Those reasons also won’t disappear with LB. Many will likely just hold onto the tzBTC instead of swapping it back, diversifying their assets, hoping the price of Bitcoin will go up.

Youves also recently announced that you can stake LB liquidity in their tool to earn rewards. This will likely continue as well, so no need to rush out.

gatekeepers could make a lot off of the arbitrage in this mess

“mess” is indeed an excellent word for what happened here. All of this nonsense being spread around about it leading to these discussions is indeed a mess.

I have no guarantees what will happen, if “gatekeepers” will come out better off and XTZ holders worse off, the other way around or everything stays the same hoping LB gets renewed. It depends on what each person does when it sunsets. LB made tzBTC much more accessible to the average XTZ holder than before, so there are opportunities for a lot of people to arb prices if it did go crazy. I suppose any outcome is possible. tzBTC was created long before LB and wasn’t created for this purpose. I don’t see tzBTC being wiped out of the ecosystem if the LB subsidy stops, and I don’t see anyone being “stuck” with it in their wallet forever

Wrong Mack. We’ve been over this with you about 4 different times now. There are no restrictions to tzbtc like there is for Usdtz. Period. I would once again recommend that you read the fine print before spouting out misinformation.

USA peeps stuck with tzbtc? lol no, unlike US peeps cannot even be stuck with Usdtz as it’s still not available for US residents to own. Once again, read the fine print.

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@AlexL, are you saying that US persons are able to wrap and unwrap tzBTC? Which of the tzBTC minters listed on https://tzbtc.io/ will allow US persons to unwrap? I ask because I honestly do not know and was under the impression they all only served EU citizens.