Sovryn Liquidity Vault Strategy

Premise: Sovryn has a dire need for stablecoin liquidity for leveraged trades, resulting in interest APR rates being double-digits, and as high as 85%.

Solution: Create an automated strategy that allows Sovryn users to lock their Bitcoin to mint DOC through Money on Chain and use that DOC to lend to the protocol, which currently earns 5% APR on DOC deposited. This interest generated could automatically buy back RBTC and add to the position, while Sovryn takes a 20% cut of interest earned.

Benefits: This may result in more DOC circulating in Sovryn, save gas for users, and allow them to earn greater passive income on their RBTC. This will also open up liquidity for leveraged trades.

Drawbacks: May not be high enough upside (with current numbers) to warrant allocation of dev resources.



Completely agree with the premise. Surprised to see no there’s responses to this yet.

I like the idea of a simple, newbie-friendly way to lock rbtc in return for solid passive income rewards. Experienced farmers will be optimizing APR and looking for higher-return opportunities elsewhere.

I was thinking along the same lines. I want to contribute but it looks like I will be losing upside from external staking to do it. There should at least be comparable incentives to place liquidity here rather than staking in Kraken. Of course - I am a newbie so I may be missing something. If so - perhaps the FAQs can point out my erroneous logic.

Is DoC minting considered a taxable event since you’re kind of selling your bitcoin in a sense?

I think money on chain needs to release something more similar to the Maker/Dai model then let the market decide.

But this is a potentially annoying issue of contention that shouldn’t be on our base stable coin imo.

Seems there’s a misunderstanding regarding the minting process of DoCs.

According to the README on the MOC master contract:

Can only be minted in exchange for RBTC.
Given an amount of RBTC paid to the contract, the system calculates the corresponding DoCs amount to mint [^1], RBTC and DoC balances are added to the base bucket and the new Tokens are sent to the user.

This seems to indicate your solution:

users to lock their Bitcoin to mint DOC

Is not possible as the mechanism for “minting” DoCs is an “exchange” for the end-user. i.e. You are selling your bitcoin for DOCs.

Thus if the price of BTC went up more than the cited 5% APR in a year, you would have less BTC than what you started with.

No free lunch.

Though their BitPro does offer some passive income, and a small degree of free leverage.

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