Background
The current supply and demand dynamics for eBTC are the following.
Demand
When it comes to upwards price pressure, there are 1.86 eBTC in user CDPs: eBTC info.
These positions are net short eBTC, so users will need to buy eBTC off the market to close them.
Treasury’s Uni V3 liquidity is currently providing 4.41 eBTC in the 1-1.01 range, which covers all potential incoming demand: Uniswap Interface
Action Items
This means that 3.39 eBTC from the 1.01-1.10 range can be withdrawn without affecting CDP holders’ exit prices: Uniswap Interface
These 3.39 eBTC can be used to repay the Treasury’s eBTC CDP, unlocking 400 stETH when bringing the position to ~200% CR after repayment.
By putting 400 stETH back into the wallet, we unlock capital for future funding and derisk the Treasury’s eBTC protocol exposure.
Supply
As for the downwards price pressure, there are 10.25 eBTC in the Curve liquidity pool: Curve.finance.
Liquidity Providers in the pool are net buyers of eBTC and are expected to sell it as incentives end and they close their positions.
The currently available liquidity on the buy side is:
- 5 cbBTC in BSM: Address: 0x686fdecc...77b2f6083 | Etherscan
- 6.32 WBTC in Uni V3 1-1.01 range: Uniswap Interface
- 1.28 WBTC in Uni V3 0.99-1.00 range: Uniswap Interface
This provides 12.6 BTC to cover the potential 10.25 eBTC sell pressure, so no actions are needed to ensure all users can exit around peg.
Badger/eBTC Liquidity
BIP 105 authorized the Treasury Council to move up to 50% of Badger/WBTC TCL to Badger/eBTC, and 5 positions were created.
As these positions are now 100% BADGER, there is no eBTC currently in there.
However, if BADGER appreciates significantly against BTC, these positions would be buying eBTC off the market.
And there’s little reason to increase the DAO’s eBTC holdings this way, given that the product is deprecated. There also might be very little eBTC liquidity available at that point, which can lead to losses for the DAO.
Action Items
Withdraw BADGER from BADGER/eBTC and move it to the corresponding BADGER/WBTC positions:
Implementation
- Withdraw 3.39 eBTC from Uniswap Interface
- Repay 3.39 eBTC to the Treasury’s eBTC protocol CDP
- Withdraw 400 stETH from eBTC protocol
- Move Badger/eBTC Uni V3 positions to corresponding Badger/WBTC positions.
Vote
- Yes - Approve the liquidity management action items as described.
- No - There’s a better way.
