Pickle Finance (PICKLE)

From CryptoWiki

A project incentivizing liquidity on the four largest DeFi stablecoins (DAI, USDC, USDT, sUSD).

Basics

History

Audits & Exploits

  • Bug Bounty program found here (12-7-2021). Rewards go up to 50k USD. Note: Currently there is no set end date for the program, therefore it is currently active.

"All the contracts are not only owned by a multisig but also behind a timelock. Any proposal takes 2 days to be executed on-chain so many factors that would result in a rug-pull would need to take 2 days to come into effect."

  • Scored a 52% on DeFi Safety (21-10-2020); "Good project, with all addresses public. No audit yet and thin documentation reduced the score. But it easy to improve from here."
  • V2 scored a 66% (12-7-2021): "PeckShield did a Pickle Finance audit on March 4th 2021. MixBytes did a Pickle Finance audit on October 9th 2020. MixBytes released a second Pickle Finance audit on November 5th 2020. Haechi released a Pickle Finance audit on November 9th 2020. Pickle was launched on September 10th 2020. Notes: most changes were implemented." With the comment: "Pickle Finance is up with 66%. Solid team with excellent audits, Decent Access controls, and decent testing."

Bugs/Hacks

"Was hacked on Saturday, draining $19.7 million in DAI. On Friday, the team introduced the cDAI jar, a “new strategy” aimed at maximizing returns from DAI deposited on the decentralized lending protocol Compound. The Pickle team, and a group of “white hat hackers” have traced the 19,759,355 DAI weekend exploit to this smart contract, according to a blog post. "This was a very complicated attack and involved many components of the Pickle protocol. As of right now, it does not seem that any other funds are at risk," they said. A fix was estimated by Sunday at 15:00 UTC. “We’re encouraging all LPs to withdraw their funds from the Jars until the issues have been resolved,” the Pickle team tweeted."

"They have resumed deposits to other jars in the latest update but have implored users to “refrain from depositing in the DAI Jar for now.“ The detailed postmortem revealed further vulnerabilities, which the team expects to fix “in the coming days and weeks.”"

"The audits from MixBytes (October 3rd) and Haechi (October 20th) were completed before the addition of ControllerV4 (October 23rd), which was one of the key attack vectors."

  • Soon after the hack, Pickle merged with yEarn and introduced (24-11-2020) new measures:

"A new token, CORNICHON, tracks losses from the recent Evil Jar exploit, distributed proportionally to victims of the attack."

Governance

Admin Key

"a) The general DAO and voting system of Pickle Finance indicates the capabilities of contract upgradeability.

b) Voting roles and MultiSig roles are clearly defined.

c) The capabilities for admin change in contract is described in their MasterChef contract.

No Pause Control documentation or test were found."

DAO

Smart Treasury

  • From their blog (9-12-2020):

"The Smart Treasury provides three main functions:

  1. Automatic buyback machine — fees generated from the protocol are used to buy back PICKLEs, which reduces the circulating supply.
  2. Liquidity provider — the Smart Treasury serves as a liquidity provider and can generate trading fees for the protocol.
  3. Token issuance pool — the Smart Treasury facilitates the secondary issuance of PICKLEs (separate from our Farms) for things such as grants.

The Smart Treasury receives all protocol fees to thus maximize buy pressure (with the exception of revenue diverted to DILL holders)."

This will be done through a Balancer pool.

"Smart Treasury goes live. The Smart Treasury will be seeded with 5,860 PICKLEs and a proportionate amount of ETH, currently worth ~$100k."

PICKLE Token

Launch

"The PICKLE token is being launched via an ongoing liquidity mine, with the increasingly popular "fair launch" model; no VC allocation, no pre-mine, and no ICO."

Token allocation

  • There’s a proposal that sets out to reduce infinite amount of Pickle being printed through a halving schedule (15-9-2020).
  • From Glassnode (18-9-2020):

"A portion of PICKLE will be set aside for a development fund. This devshare will consist of 2% of newly minted PICKLE on top of what is being minted to reward stakers. While this devshare model is usually not controversial, some investors are skeptical after the SushiSwap saga.

The distribution schedule is constantly evolving, and there are ongoing conversations within the Pickle governance community around introducing a potential hard cap on supply in the future. The Pickle community has voted in favor of a proposal to continually reduce token emissions over the first year."

Utility

"Pickle is innovating in this area by using quadratic voting — which takes the square root of each vote instead of counting it nominally— to prevent whales from having too much influence. The project’s governance structure prompted a response from Vitalik Buterin himself."

  • From Glassnode (18-9-2020):

" PICKLE holders who participate in governance decisions will receive a share of the 3% governance fee and 0.5% withdrawal fee on pickle jars. The token will adopt a buy back and burn model (on top of any future governance decisions to reduce the emission rate), which will slow inflation, and possibly even create a deflationary issuance rate if the protocol achieves widespread success. The mechanism for this burn model will be implemented via "pickle jars"".

Token Details

  • From Glassnode (18-9-2020):

"At the current PICKLE price of around $30, the protocol would need to generate $13.3m of yield per day to counteract inflation. This translates to $4.9 billion in annual yield, which (at the current estimated APY of 40.5%) would required $12 billion of capital to be staked in pJars.

Assuming a more realistic (but still optimistic) figure of $500 million staked in pJars, the protocol would on average generate $554,795 in daily yield, supporting a zero-inflation PICKLE price of $1.25.

Of course, the price at which inflation is zero is not necessarily its viable market price. The price will almost certainly be driven up due to speculation, demand for voting power, and expectation of future returns. However, the zero-inflation PICKLE price is a helpful starting point when looking at a valuation for the token."

DILL Token

 Launch

  • Got created after the merger of yEarn and Pickle (25-11-2020).

Token allocation

Utility

  • From this tweet (25-11-2020):

"Investors who vote lock their tokens for $DILL will have a claim on three sets of cash flow: strategy fees from what were previous pJars, a 20% performance fee on yVault tokens in the gauge, and 0.5% withdrawal fee."

Token Details 

Technology

  • Pickle PicoPaper can be found here.
  • Code can be viewed here.
  • Built on: Ethereum

How it works

"Touting the tagline ‘Off-peg bad. On-peg good’, Pickle Finance offers more rewards to below-peg stablecoin pools and fewer rewards to above-peg stablecoin pools. As illustrated in the Pickle PicoPaper, the aim is to get people to sell above-peg stablecoins and buy below-peg stablecoins."

"Pickle brings the four largest stablecoins (DAI, USDC, USDT, sUSD) closer to their peg by using the power of farming and pVaults."

Upgrades

pJars

"We realize that we can’t just print $PICKLEs forever, there needs to be a reason (beyond the typical “governance” bullshit) to hold $PICKLEs. pVaults will come a few weeks after farming and will use flash loans to leverage up and arb between stablecoins, further bringing stablecoins to their pegs while generating return for $PICKLE holders. More details to follow."

  • From Glassnode (18-9-2020):

"Alongside the PICKLE mining mechanic, the Pickle protocol will employ a strategy of vault-based yield farming, dubbed "pickle jars" (or pJars), to apply additional pressure to stablecoins in order to bring them closer to their pegs.

Similar to Yearn vaults, these pJars will utilize pooled assets deposited by LPs to generate yield (for example, by farming sCRV tokens via Curve.fi stablecoin pools). A portion of these returns - currently 1.5% - will be used to buy back and burn PICKLE tokens, applying deflationary pressure to the token supply."

Liquidity Mining

Scaling

Different Implementations

Interoperability

Other Details

Oracle Method

Privacy Method

Compliance

Their Other Projects

Roadmap

"In the coming weeks, Pickle Finance will seek to deploy pVaults, a way to stake PICKLE and earn profits from flash loan arbitrage opportunities on stablecoins trading off their peg."

Usage

"Saw $53M in 24 hour volume this weekend as its native governance token, PICKLE, traded as high as $85, according to CoinGecko."

  • The total value locked (TVL) in the protocol at press time [after the hack] is $26.3 million (23-11-2020). 

Projects that use or built on it

yEarn and Pickle Relationship

  1. "Pickle Jars & Yearn’s v2 Vaults merge.
  2. Pickle introduces reward Gauges. Pickle emissions remains, with tokens distributed through reward Gauges.
  3. Yearn Vault depositors can earn additional rewards by depositing Vault shares in Gauges.
  4. Pickle Governance participants get voting power by locking Pickle for set maturity dates, and receive DILL.
  5. Yearn vault depositors can earn additional rewards by locking Pickle for DILL, up to 2.5x, the more DILL they hold the greater the rewards.
  6. Gauge deposit, withdrawal, performance, and protocol fees go to DILL holders.
  7. A new token, CORNICHON, tracks losses from the recent Evil Jar exploit, distributed proportionally to victims of the attack."

Competition

Pros and Cons

Pros

"It’s like stable coin farming that can generate massive cash flows through arbitrage opportunities available on-chain regardless of whether yield farming is in-season or not."

Cons

"In my mind these are some of the key factors that could endanger $PICKLE:

  1. The rewards dry up to the point where all the capital which came in suddenly cycles out and moves onto the next things. Having $250m locked up is great but not so great if things revert back quickly.
  2. I think the bigger risk at play here is if $PICKLE fails to generate any intrinsic cash flows and everyone is just left holding a meme coin. Not that meme coins can’t be valuable but only if $PICKLE’s generate cash flow can this become a serious automated on-chain stable coin hedge fund (who knew that would ever be a thing).
  3. Things get a bit chaotic within the team or some sushi-level politics start playing out and what once turned out to be something special, gets corrupted due to external interests and pressures. I hope this doesn’t happen but you can expect anything in DeFi these days."

Team, Funding, Partnerships, etc.

Team

  • Full team can be found [here].

Funding

Partners 

"The Badger DAO plans to collaborate with Pickle to cook up better yields for tokenized BTC primarily through our Sett product, Badger’s yield aggregator. With that, we hope to increase the governance reach and rewards incentives of the Pickle community that may intermingle with the Badgers."

  • yEarn has merged with a bunch of projects in November. First was Pickle Finance, which merged with yEarn only days after it got hacked. Cover and other projects followed soon.

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