Pickle Finance is the latest addition to DeFi’s infamous food token assembly. It is yet another decentralized finance protocol designed to serve the yield farming audience and to exploit arbitrage opportunities around stable coins.
The project launched on September 11 and was welcomed with a lot of initial hype resulting in a parabolic price movement of the token. More than a week after the launch the question remains which fundamentals the protocol has and how it can serve the nascent DeFi industry.
Use Case
Defi has a fundamental problem: the price stability of its most respected and decentralized stable coin Dai can not be guaranteed. Dai was not keeping it’s dollar beg recently due to all the yield farming activities that are going on with the token.
The initial objective of the Pickle Finance protocol was to stabilize the Dai stable coin and to reward users who participate in stable coin arbitrage.
The developers behind Pickle Finance choose to remain anonymous. The code is open source just as in any DeFi protocol and the repository on GitHub has three contributors.
The developers are committed to keep developing the protocol and elaborating on the use cases as well as the token economics. At the current early stage of the protocol it is not yet clear in which direction the project will evolve.
The community is discussing various proposals on how to increase the attractivity of the Pickle token.
Essentially there are three types of interactions that the Pickle protocol facilitates:
- yield farming in order to earn Pickle tokens
- migrating liquidity from SushiSwap to Uniswap
- jars which are yield farming strategies on Uniswap in order to earn UNI tokens
In order to use the Pickle jars you need to be a liquidity provider on Uniswap. On Uniswap you’ll receive liquidity provider tokens which you can then stake into a 0.69-series-pJar.
The function to switch from the SushiSwap liquidity pool to Uniswap supports users who are interested in using Pickle jars.
In terms of the nature of the protocol, Pickle might be best compared to yearn.finance which develops automated strategies for users to maximize their yields on a given token that they own.
Adoption
None of the big established exchanges have listed the Pickle token so far. It seems to be traded mostly on Uniswap for now.
The daily volume is around 10 million USD of which around 80% are processed on Uniswap. The price of the token has been extremely volatile since its introduction.
It needs to be noted that a code review was not performed on the source code. Therefore the protocol might be even more vulnerable towards smart contract risks.
In the end, several protocols are competing for very similar use cases. Decentralized Finance tends to play out in a way that the best protocol for a given use case accrues all the value while the other protocols disappear.
Conclusion
Pickle Finance was launched with high hopes. The protocol itself is very new and it remains to be seen whether it can live up to the expectations.
Whereas the ICO phase in Ethereum was characterized by promises made by marketing and business people, the DeFi era depends on the execution of the developers. Only the most suited protocols will survive and it remains to be seen if Pickle can be one of them.