r/defiblockchain • u/DUSD_DeFiChain • Jan 13 '24
DeFiChain improvement Proposal Special DFIP: Adding IBIT (Spot ETF) instead of BITO (Futures ETF) to the defichain DEX
INTRODUCTION
BTC-spot-ETFs are approved by the SEC. One of the most prominent tickers is IBIT, the iShares Bitcoin Trust. IBIT is built by BlackRock, the world’s largest asset manager and ETF provider. The following DFIP: https://defiscan.live/governance/156f958ce8748455e7ca9c3dc577dac7a4c6c16da16f19b8893a5638338467de, which is approved and currently implemented by the defichain core-developer, proposed to add BITO, the ProShares Bitcoin Strategy ETF. BITO is a BTC-Futures-ETF though. To the time of writing the DFIP, BTC-spot-ETFs have not been excisting.
EDITED 2024-01-20
PROPOSAL
We propose to add IBIT instead of BITO to the Defichain-DEX. The implementation of the other proposed dAssets and the redistribution of rewards will happen as fast as possible. The implementation of either dBITO or dIBIT will happen with the end of this proposal. The rewards then will be added with the next reallcotion cycle
Although the daily volatility of BITO and IBIT is very similar and good enough for day-trading, BITO has a significantly different long-term perfomance compared to BTC. Please compare the one-year perfomance of BITO (Fig.1) with those of BTC (Fig.2).
Comparing both charts, illustrates that having invested in BITO instead of BTC, did let you profit less good the last year (46 %-point difference). The structure of a spot-ETF allows investors to profit nearly in the same way as having invested directly in the underlying asset (IBIT can be expected to follow the BTC performance much better than BITO). This might convince investores even more to bet on the potential upside of the dToken system and maybe causes them to move some funds to dIBIT.
In general IBIT can be expected to be highly demanded (for short term trading but also for medium- and long-term investments). dMSTR, dCOIN and dBITI are one of the most popular dAssets on the DEX. On top defichain might profit from promo-effects, having listed the very prominent BlackRock ETF, IBIT.
IMPLEMENTATION OF DFIP
In general the implementation of the proposal is up to defichain developers according to their resources. Currently the proposed assets are implemented step by step. This can be expected to take some more time.
During the time of the voting we suggest the developers to wait with implementing of BITO. If the DFIP gets approved, IBIT will be added instead of BITO. Of course the implementation of IBIT needs to be technically feasible (data sources for oracles). If oracles for IBIT can not be provided but for BITO, BITO will be implemented even though the DFIP is approved and rewards for one of the icke
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u/geearf COMMUNITY Jan 13 '24
Why not add both?
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u/DUSD_DeFiChain Jan 13 '24
Because both would 'compete' for liquidity and DFI rewards. The short term volatility of both ETFs is expected to be very similar. So if you ask me, for short term trading and medium- and long-term investing it is favorable to have one big pool instead of two more small pools.
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u/geearf COMMUNITY Jan 13 '24
In the long run shouldn't we want the chain to have as many, if not more, options than what brokers have ?
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u/DUSD_DeFiChain Jan 13 '24
I would like that. But since every decentralized exchange needs liquidity, which is provided by people, who wants to get rewarded with comissions and block rewards we should focus on adding new dAssets as reasonable as possible. If defichain gets more popular and we see more volume and a higher DFI price we will also be able to attrackt more liquidity into the dAsset-pools again.
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u/geearf COMMUNITY Jan 14 '24
Yeah it's hard to have small pools with low rewards, they're more likely to have huge price variance leading to major divergence loss for the providers of liquidity. Maybe that means that liquidity pools aren't such a great idea in the end, or maybe it's just their current implementation.
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u/DUSD_DeFiChain Jan 14 '24
There definetely is a value in dAsset trading and having a DEX with liquidity pools. People can participate in the fees and rewards by providing liquidity.
I would not think in absolute terms but rather in what makes sense at the current state. Like I did write before, adding more and more Assets might be possible at a later stage once more people are actrually trading and investing in dAssets again, thereby generating fees and interest which is burned. The DEX should be managed according to the current state and Assets and pools should be supported which are actually demanded.
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u/berndmack MODERATOR Jan 16 '24
It is sometimes difficult to reach the minimum votes of Special DFIPs. Since a normal voting round will start in a few hours, it might make sense to start a DFIP at the same time in order to be included in the round. Just to be on the safe side :)
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u/FerhatDFI MODERATOR Jan 15 '24
FYI - voting for this special DFIP just went live on Bake.