How to Arbitrage in RiceQuant

NOTE:

We Rebrand Recently. New brand is RiceQuant and Old Brand is ifarm.finance. $IFA => $RICE

We built a cyclic market game mechanism at the beginning of liquidity mining. We recommend that you, who are smart, study it carefully, and you can find many arbitrage opportunities.

The charm of DeFi stems from the free combination and creativity like Lego. We can freely combine various components in the DeFi industry through smart contracts, such as uniswap, and can also integrate popular and highly recognized crypto assets into our products without permission to create an interesting market. Yes, ifarm.finance is like other DeFi projects, which also connected with uniswap and also support DAI, wBTC for liquidity mining.

The market volates all the time, and price volatility mean investment risks, but also there are many potential profit opportunities. Next, we will introduce arbitrage in ifarm.

Lending Pool

Seeding and locking DAI, wBTC, wETH can borrow iUSD, iBTC, iETH respectively, then harvest IFA. This type of pools has low principal risk and low IFA earnings.

iToken LP Pool

Seeding iToken LP can harvest 5x IFA rewards. The purpose of iToken-LP pool setting is to make iToken have sufficient liquidity and to support the Rebase mechanism.

At its core, iToken is an elastic supply cryptocurrency, which expands and contracts its supply in response to market conditions, initially targeting 1 DAI per iUSD, 1 wBTC per iBTC and 1ETH per 1 iETH. This type of pools has medium principal risk and 5x IFA earnings.

IFA LP Pool

Seeding IFA-DAI UNI-V2 LP, IFA-wBTC UNI-V2 LP, IFA-ETH UNI-V2 LP can harvest 50x IFA rewards. The purpose of IFA LP pool setting is to make IFA have sufficient liquidity and to seek market price. Due to the high volatility of IFA, the principal risk of participating in liquidity mining is high, so the return is 50x IFA reward.

Borrow and Farming

In the iLoanbar scenario, Farmer can first seed and then lock the position to borrow iToken, and then further participate in 5x IFA reward pool mining to maximize the use of the principal of DAI/{wBTC}/{wETH}, that is, use leverage to gain profits.

iToken arbitrage

Since iToken with a Rebase mechanism, iToken holders can achieve arbitrage around iToken’s soft peg pricing.

Debtor who borrowed iToken from iLoanbar also can arbitrage between business of iLoanbar and iToken rebase. For example, Bob collateralized 1000 DAI to borrow 700 iUSD for 30 days with 105 iUSD interest fee. That means Bob’s total debt is 805 iUSD. Within 30 days of owning 700 iUSD debt, iUSD will be rebased times. During this period, when the positive rebase is much larger than the negative rebase, the position of 700 iUSD may directly cover the interest generated by the debt for 30 days.

We call the farmer who borrow iToken from iLoanbar as iToken debtor. When the iToken debtor repays the debt, it needs to repay the principal of the debt with iToken itself he borrowed and repay the debt interest with IFA. In this scenario, the debtor can utilize iToken’s rebase mechanism to arbitrage the debt principal and debt interest coverage. Since the debt interest must be repaid through IFA, this can increase the purchase demand of IFA, thereby increasing the market price of IFA.

When the borrower’s debt plus interest fees is above the collateral value and liquidation ratio, the collateral will be under risk of liquidation. Anyone can trigger the process through the smart contract. The liquidator will retrieve the collateral plus the farming rewards by paying back iToken at a discount ratio. In other words, in the liquidation process, the liquidator is required to a liquidation cost, which value less then default debtor’s collateral to retrieve the collateral plus the unclaimed farming rewards. However, in the liquidation process, the debtor’s default debt interest and liquidation execution fees need to be paid by IFA, which can increase IFA’s market purchase demand and IFA price.

iToken Farming Pool

Seeding IFA-DAI UNI-V2 LP，IFA-wBTC UNNI-V2 LP，IFA-ETH UNI-V2 LP can harvest iUSD, iBTC, iETH respectively. These farming pools can increase the purchase demand of IFA, thereby increasing the market price of IFA.

Costco Business

In Costco, farmers can use iToken to purchase IFA at a discount of 95%. In this way, the purchase demand of iToken will increase. Since iToken’s issurance in iLoanbar and iToken farming pools, the previous paragraph has explained the stimulus of these two businesses to IFA purchase demand, so that a closed loop can be constructed to form a cyclical stimulation.

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