UMA's latest liquidity mining allows you to farm three kinds of tokens with Bitcoin, fulfilling three wishes at once!

The decentralized financial contract platform UMA announced on September 7th that it has partnered with the cross-chain asset protocol REN Protocol to launch the second yield dollar "uUSDrBTC - OCT, uUSD" and simultaneously initiate liquidity mining. Farmers participating in liquidity mining will receive UMA, REN, and BAL tokens as mining rewards.

UMA's Latest Liquidity Mining Solution

Decentralized financial contract platform UMA announced on July 23, 2020, the launch of a new token - Yield Dollar (yUSD), which is similar to a bond. It allows users to collateralize cryptocurrency assets to generate "Yield Dollars" that are pegged to one US dollar upon maturity. For more information on how Yield Dollars work, refer to the previous article.

In order to further expand the adoption of their products, UMA has partnered with cross-chain asset protocol REN to introduce liquidity mining. This allows users to use renBTC (ERC20 version of Bitcoin) generated through REN as collateral to create a second type of Yield Dollar - "uUSDrBTC - OCT (expires on October 1), uUSD." Additionally, UMA has set up a uUSD / USDC (50/50) liquidity pool on the automated market maker protocol Balancer, which has been whitelisted by Balancer. Essentially, by providing liquidity to the uUSD / USDC (50/50) pool on Balancer, users can participate in the liquidity mining program launched by UMA in partnership with cross-chain asset protocol REN and earn UMA, REN, and BAL tokens simultaneously.

According to official statements, the liquidity mining program will distribute 10,000 UMA tokens, 25,000 REN tokens, and BAL tokens (proportionally based on the total liquidity on the Balancer platform) weekly. The rewards will be airdropped approximately 24 hours after the snapshot is taken at 7 a.m. on Tuesdays (Taiwan time). Rewards are block-based, so even providing liquidity for a few minutes can earn rewards. The actual annual percentage yield depends on the amount of liquidity in the pool and is unpredictable, only estimable. Interested individuals can use thiswebsite for calculations. Based on current liquidity, the estimated annual return rate for liquidity mining is around 230% (excluding REN and BAL).

Process Overview

1. The first step to participate in liquidity mining is to convert BTC into an ERC20 version using RenBridge. Once completed, your BTC will become renBTC and be transferred to your Ethereum wallet. (Alternatively, you can purchase renBTC directly on exchanges or DEX).
2. Next, access this platform, a frontend interface developed by the UMA community, to create and view data related to Yield Dollars. Through this platform, convert renBTC into uUSD tokens on the UMA protocol. (Note the liquidation risk)
3. Finally, deposit uUSD and USDC in the Balancer pool in a 50/50 ratio to earn BAL, REN, and UMA tokens.

In fact, you can skip the first two steps by directly purchasing renBTC and uUSD, but this is not recommended for users with large capital as it significantly increases the entry cost.

Benefits and Risks of the Latest Solution

In the world of ERC20 Bitcoin, only WBTC has been supported by lending protocols like Maker. Therefore, Yield Dollars collateralized by renBTC are particularly crucial for REN, a cross-chain asset protocol, as it marks the first time renBTC has been used as collateral for an innovative financial product since its issuance. However, it was recently discovered that over 9000 BTC collateralized by REN were stored in an address controlled by 5 team members, indicating that the protocol's decentralization is not as high as perceived, posing trust risks.

https://twitter.com/ChrisBlec/status/1302998918020714497

According to Coingecko data, since the launch of this liquidity mining program, the liquidity of renBTC has increased by over 600 coins (currently valued at over $6.1 million).

On the other hand, UMA's second Yield Dollar product further enhances the diversity of derivative financial products in the decentralized finance sector. For Bitcoin holders, UMA's liquidity mining solution is undoubtedly one of the most anticipated activities in the coming weeks.