The Stabilize Protocol is a decentralized finance application designed to help keep stablecoins prices stable by using active strategies that arbitrage over multiple exchanges and by providing liquidity to protocols that support stability. Users earn from price fluctuations between tokens, whether the market is in bull or in bear. The protocol can be utilized on both Arbitrum, a layer 2 solution for Ethereum and Binance smart chain networks.
As we looked to discover new ways to take advantage of price volatility among cryptocurrencies, we designed a new strategy that takes advantage of price fluctuations in one volatile token instead of the typical 2 or more tokens. This allows us to carve a space unique to Stabilize that is resistant to competition from other arbitrage bot strategies.
Enter the wBTC Strategy
The new strategy will take advantage of the price volatility that exists in Bitcoin, specifically wBTC, which is a proxy token for Bitcoin. Using moving averages, the strategy will swap between wBTC and USDT (Tether) when certain price points are reached.
How it works is when the spot price of wBTC exceeds the average price of wBTC by a certain threshold, the strategy will swap some of it to USDT. When the spot price of wBTC is below the average price of wBTC by a certain threshold, the strategy will buyback wBTC with its USDT. The general goal of this type of strategy is to earn more of the volatile asset by taking advantage of its price swings.
The Stabilize Strategy
To participate in this trading strategy, users deposit only wBTC. The strategy utilizes Chainlink price oracles to determine the USD value of the deposit. Chainlink oracles are resistant to flash loan manipulation and black swan events.
Throughout its life, the strategy will hold both wBTC and USDT and trade between them. Users can only withdraw wBTC. USDT will be automatically swapped to wBTC if there is not enough wBTC to withdraw from the strategy.
Executors are responsible for executing transactions at the right moments that will generate a return for the strategy and a profit for the executor.
The strategy is aimed for those who are generally bullish on the price of the volatile asset as that is the only asset that can be deposited and withdrawn. Because of the nature of swing trading, there can be periods of loss along with periods of gain. This is unlike most of our other strategies that guarantee a positive return. It is possible to exit the strategy with less wBTC than when you entered if you are in a period of loss.
We expect that via this method, we will unlock a novel method to support stability of tokens beyond just stablecoins. This unique strategy aligns with our goal of creating strategies that are more than just copycats and actually provide value to the ecosystem.
Join our community to learn more about Stabilize and when the strategy will be released
Visit the website to get started using the Stabilize protocol, follow us on Twitter and join the community on Telegram. We will post on Twitter when the strategy is finally ready for release.