Switcheo Cross-Chain LP and Vault



  • To broaden the reach of Switcheo and fully realize cross-chain DeFi, I believe that we need to push some boundaries and to get more eyes to the project. What better way to kick this off than offering a liquidity mining event that spans the Tradehub and Ethereum blockchains?

    This is just an idea but would like to hear what others or the team think might be possible with how this would work. There is a lot that is unknown to me and would love to learn from others and hear their ideas.

    Option 1

    • Switcheo token created on the Ethereum blockchain

      • I believe the community could write this but the core Switcheo team would need to deploy, manage, and own this. Ideally this could even be a multisig key (Gnosis) or have a way to prove that assets will not be minted out of thin air, to avoid the potential for a rug pull.
      • A Smart Contract would watch for the amount of Switcheo transferred from Tradehub -> Ethereum via the bridge and arrive in the users Ethereum wallet.
    • We could bootstrap a Liquidity Pool (LP)

      • Ideally this would be on Sushiswap or Uniswap but I am going to use Sushiswap for this example b/c there is a bit more upside that Uniswap does not offer.
      • Apply for the Onsen Sushiswap rewards with Sushi, if granted it awards Sushi tokens to the LP's on Ethereum and can be claimed by each Ethereum user.
      • Ideally we would have a couple of pools
        • SWTH-ETH
        • SWTH-wBTC
        • SWTH-USDC
      • Someone would need to fund the LP first, usually these are funded with ~50 ETH + the corresponding token but we could figure out what makes the most sense.
    • Enhance LP incentives

      • Once the pooled token (SLP) is minted the Ethereum user can choose to keep the token on Ethereum and earn Sushi or eventually lend it as collateral on Sushiswap.
      • OR the user can transfer the SLP token back to Tradehub and stake on Tradehub
      • When the user transfers back to Tradehub the Sushi being rewarded would be pooled to an Ethereum address that can be mass claimed and shipped over to Tradehub.
    • Stake SLP or deposit SLP token into CDP platform to generate tokens that would be used to deepen liquidity on Tradehub pool and earn rewards.

      • This would add ability to add deeper liquidity or make the synthetic pair tradeable (the SLP)
      • The stakers could earn Switcheo on top of the Sushi being earned
    • Sushi or Uni token created on Tradehub

      • Depending on the route taken the corresponding token should be created on Tradehub
      • When Sushi arrives on Tradehub, it gets distributed to the holders proportionally
      • Optionally, there could be a smart contract that takes the Sushi rewards and automatically harvests rewards into xSushi to gain Sushi trading fees, adding extra APY to the mix.
      • The rewards could be auto-compounded or just paid out once they cross the bridge to a Tradehub wallet.
    • To unwind the tokens could be unstaked, debt repaid, and sent back through the bridge and on each respective chain.

    Here is a very rough visual representation of the idea:

    Switcheo + Sushi Staking

    There are a couple of problems with this and some gaps that need to be filled, it's not clear to me how step 4 would actually work on Tradehub b/c it's not really a direct asset (SLP) but a synthetic that represents a claim to the LP pool on Sushiswap. It could be possible to mint collateral via a CDP on Tradehub but we have yet to see this functionality in action, at that point then the SLP token can mint an asset that could be staked or traded. Which leads me to….

    Option 2

    Instead of having the user do anything on Ethereum and bearing the burden of going across the Tradehub Ethereum bridge we could propose something that the user only has to touch on the Tradehub side of things. Much of the logic above still applies but this would to help solve the CDP problem of Step 4.

    • Sushi or Uni token created on Tradehub
      • The desired pool gets created on Tradehub
        • SWTH-SUSHI
        • SWTH-UNI
    • Based on the pools we decide on we offer the ability to stake it into the Liquidity Mining program.
    • Once the token is staked a smart contract can take that token pair and transfer it to the Ethereum blockchain
      • Take ?half? the liquidity from the pool and send it to the Ethereum to earn Sushi or Uni rewards
    • Once on the Ethereum blockchain a smart contract on this side will deposit into Sushi or Uni and manage the LP and rewards
    • If the user wants to exit the smart contracts on each chain will execute the reverse process.

    I'm not sure if this is possible but hoping to hear from others, cheers!


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