MetalSwap is a pioneering protocol in the Crypto DeFi landscape that specializes in enabling RiskOff Hedging Contracts on digital assets. As the DeFi landscape evolves, it is essential to remain abreast of technological shifts and advancements, ensuring MetalSwap remains at the forefront of delivering its offerings.
Objective:
The purpose of this proposal is to discuss the feasibility and advantages of deploying MetalSwap on the Zero-Knowledge rollups of Linea’s ETH Layer-2.
Rationale:
- Scalability Challenges: Market movements bring also new technology surrounding the direction of scalability and the ideal Layer-2 technology solution. By diversifying and testing our contracts in various roll-ups with different technologies, MetalSwap enhances the adaptability to future shifts in the technological landscape.
- Successful Testnet Collaboration: The prior collaboration with Linea in a testnet environment has yielded valuable insights. It has showcased the potential benefits of this path, notably the heightened visibility it can afford MetalSwap. The testnet campaign on Galxe brang the dApp to the eyes of more than 2 million people:
NFT USDC LP: 61,087 USDC Liquidity Providing positions created
NFT WBTC LP: 3,272 WBTC Liquidity Providing positions created 148198
Hedging Contracts 148,198 Hedging Contracts
- Token Deployment: We are considering the deployment of the service with the wstETH token. The rationale behind this is twofold:
- Alignment with Ethereum: As Ethereum’s chain grows and evolves, it’s paramount for MetalSwap to align its services accordingly. With the liquid staking token gaining traction, deploying with wstETH, a token with specific price operations.
- Contemporary Relevance: By focusing on the “moment of now,” we acknowledge the increasing importance of the liquid staking token in the current market landscape.
Using wstETH would allow us to benefit Liquidity Providers because they’re taking the ETH Staking Rewards, and have an asset that in a fairly small time frame has a price trend similar to ETH. Whereas the “common” stETH is not technologically usable because of its rebasement feature.
What is wstETH
The wstETH is the wrapped version of the stETH token (both are deployed by Lido), and it’s more than just a tokenized representation of staked Ether. It’s an innovation that bridges the gap between staking and DeFi, offering liquidity, reward accrual, and vast integration possibilities. The stETH token has a rebase mechanism that is not manageable on dApps like MetalSwap; this mechanism is not present in wstETH that instead of changing the token number, it increases its value overtime accordingly to ETH staking rewards.
Key Features of wstETH
- Liquid Representation: wstETH allows users to maintain liquidity even while their original ETH is staked. This means users can use, trade, or leverage wstETH without having to unlock and remove their staked ETH.
- Reward Accrual: The value of wstETH increases over time as it accrues staking rewards, meaning that holding onto wstETH is analogous to continuously earning staking rewards.
- Interoperability: wstETH can be integrated into other DeFi protocols, offering versatility and utility in the wider DeFi ecosystem. It’s a bridge that connects the staking world with the bustling DeFi marketplace.
Benefits in MetalSwap’s Context:
- Enhanced Utility: By supporting wstETH in our Layer-2 deployment, we enable users to hedge with a token that not only represents staked ETH but also accumulates value over time.
- Integration Synergy: wstETH’s liquidity feature aligns perfectly with MetalSwap’s hedging functionalities, offering users a fluid and efficient experience.
- Wider Appeal: Recognizing the growing traction of liquid staking tokens like wstETH, integrating it into our system can potentially attract a wider user base familiar with or interested in staking rewards.
MetalSwap’s decision to incorporate wstETH into its Layer-2 strategy underlines our commitment to staying at the forefront of DeFi advancements, ensuring we provide our users with cutting-edge tools and functionalities.
Implementation Strategy:
- Phased Deployment: We propose initiating a controlled deployment on Linea’s Layer-2 infrastructure. This measured approach allows us to observe, troubleshoot, and adapt to any unexpected challenges that might arise. By deploying in stages, we can ensure a smooth integration that prioritizes the user experience and the stability of existing services.
- Feedback Loop: Test with developers of the Hedging Contracts on Linea’s Layer-2 zk-rollup. This will allow us to make real-time adjustments, ensuring optimal user satisfaction.
- Official integration with wstETH: As previously mentioned, the aim is to deploy the Hedging Contracts with wstETH token paired with a stablecoin. MetalSwap’s Devteam will work on this integration, ensuring that the token functions seamlessly within the Layer-2 environment.
- Ongoing Monitoring and Support: Post-deployment, a dedicated team will continuously monitor the Layer-2 operations, ensuring its smooth functioning and providing immediate support if any issues arise.
The DeFi foundation will cover the costs using funds allocated for the development of the project.
So, by aligning with technological advancements and acknowledging market trends, deploying on Linea’s Layer-2 solution presents an advantageous trajectory for MetalSwap.
Voting
This is the first ever official proposal to take place on Snapshot. Therefore, we invite every voter to follow MetalSwap’s Official Snapshot Space.
The voting timeline is set for 3 days as usual, commencing on the 6th of November 2023, net of technical problems that we cannot foresee as it will be the first proposal on Snapshot.
Your feedback and discussion over this topic can profoundly shape the future of MetalSwap. Your viewpoints and understanding drive our growth, so take this opportunity to make a lasting impact.
- The DeFi Foundation