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PolyCub - Creating a positive feedback loop

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@tokenizedsociety
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The recent announcement by LeoFinance shows that PolyCub is on its way to creating a positive feedback loop and adding immense value to its investors

Something that I and many others have been addressing in articles recently is some of the issues with the economics of HBD. The most common way to address this subject is by looking at the supply and demand of HBD. The interest rate increase is a great way to "fix" the demand part because, at a 20% interest rate, HBD is a solid competitor even to the most famous projects out there and that should attract new investors willing to diversify their portfolios.

But there is still the supply side of the equation. That's a big issue because what is the point in having a very attractive product if it's almost impossible to buy it? That is the case with HBD. At the moment, the only ways one can get HBD is by using the blockchain conversion feature, which literally takes days (3.5) to complete and has a risk factor or buying it in the market. The problem is there is simply no liquidity to meet the demand that will be created by the higher interest rates. But don't worry because not all is lost!

PolyCub saves the day once again

On the very next day after the change in the HBD APR, the LeoFinance team announced that they are building a $5M Liquidity Pair for HBD-USDC on PolyCUB! I'll leave the details for you to read straight from the source because they will do a much better job at that than I but, to sum it up, a new token will be introduced in the economics of PolyCUB. This token is pHBD, which is a wrapped version of HBD that exists on Polygon.

In addition to that, a vault for pHBD-USDC was created and the idea is to build a liquidity pool of considerable size. According to Khal, LeoFinance CEO and founder, based on the HBD currently in circulation, some talks he's had with some Hive whales and his personal plans for the pool, the goal is to build $5M in liquidity there which should be more than enough to supply the token with enough liquidity for the time being.

That should push up the price of Hive and create an investment opportunity that can pay up to 40% on stablecoins, which is pretty crazy!

And there is more!

We talked about how this is going to be positive for Hive but the LeoFinance team structured things in a way that they can benefit xPolyCUB as well.

There will be a 0.25% fee on wrapping and unwrapping HBD/pHBD and also a fee for depositing pHBD-USDC. The income of these fees will be paid to the PolyCUB's Protocol Owned Liquidity to back the value of POLYCUB.

Also, they plan to add governance to xPOLYCUB in the near future so people will need to stake more and more of that if they want to have a say on how much yield is allocated to some vaults. If it works as intended, this move can create competition for xPOLYCUB which, as consequence, will drive the price of POLYCUB up.

I think LeoFinance was already thinking about something like this even before the change in the HBD interest rate but either way, it was a great response to the liquidity issue and also a great way to add even more value to PolyCUB. I'm looking forward to seeing it go live!

Final thoughts

The creation of a deep pHBD-USDC liquidity pool is a smart move by the LeoFinance team because not only it will solve one of the biggest issues with HBD but it also will help to create even more value for PolyCUB and its investors.

Posted Using LeoFinance Beta