TL;DR:
One of the goals with eBTC deprecation (TCD #88) was to:
Make sure that there is enough liquidity available for eBTC users to exit their positions close to peg.
With the recent increase in BSM capacity to 10 cbBTC, this target is now met, so the Treasury can proceed with withdrawing its funds from the eBTC protocol.
Background
Demand
When it comes to upwards price pressure factors, there’s one user left with 1.18 eBTC CDP.
This position is net short eBTC, so the user will need to buy eBTC off the market to close it.
Liquidity available on the sell side is:
-
Treasury’s Uni V3 liquidity: 10.10 eBTC in the 1-1.01 range
-
BSM: 3.25 eBTC available after recent BSM limit increase to 10 eBTC/cbBTC
-
5.63 eBTC in the Curve eBTC/tBTC pool
Overall, this means that there’s plenty of excess liquidity on the sell side to cover the potential demand coming from the single remaining user.
The Treasury’s eBTC protocol debt is 8.13 eBTC, and this position can be safely closed using the Uni V3 LP.
If we were to do it today, that would leave 1.97 eBTC in the 1‑1.01 range.
While we could technically withdraw that liquidity as well, I believe it’s better to keep it for the time being for the convenience of the remaining user.
There isn’t much downside to keeping a small eBTC LP in the 0.99‑1.01 range for the Treasury, as that eBTC can be exchanged for cbBTC from BSM if needed.
Action items
- Withdraw 8.13 eBTC from the 1‑1.01 range.
- Close the Treasury’s CDP in the eBTC protocol.
This will return 545 stETH locked in the protocol back to the wallet.
Supply
As for the downward price pressure factors, there are 5.63 eBTC in the Curve liquidity pool.
These LPs are net buyers of eBTC and are expected to sell eBTC as they close their positions.
Liquidity available on the buy side is:
- 6.75 cbBTC in BSM
- 1.28 WBTC in Uni V3 0.99-1.00 range
- 0.61 WBTC in Uni V3 1-1.01 range - which will turn to 0.12 WBTC once we close the Treasury’s CDP
- 10.32 tBTC in the Curve pool that we expect to exit as these positions unwind.
Again, there’s plenty of liquidity available for remaining eBTC holders to exit at peg.
The only potential complication is that BSM is not easily accessible directly - it gets filled through arbitrage.
So it makes sense to keep some Treasury liquidity in the Uni V3 LP to improve execution prices for remaining users.
Implementation
- Withdraw 8.13 eBTC from Uni V3 1-1.01 range
- Repay all eBTC debt (8.13) to the Treasury’s eBTC protocol CDP
- Withdraw all stETH (545) from eBTC protocol
Vote
Yes - Close the Treasury’s eBTC CDP as described.
No - There’s a better way.
