UMA Parnters with Ren Protocol for Bitcoin-backed Yield Dollar

September 7, 2020 John Coinbase 0

UMA – a permissionless synthetic asset platform – and Ren Protocol – a trustless cross-chain bridge – are teaming up to launch a bitcoin-backed yield dollar  – uUSDrBTC-OCT.

 

The renBTC Yield Dollar is UMA’s second yield dollar product following an ETH-backed yield dollar – yUSD – back in July. The introduction of the uUSDrBTC-OCT product comes with UMA’s second liquidity mining campaign, offering 10,000 UMA in rewards each week alongside 25,000 REN and underlying BAL rewards.

The renBTC Yield Dollar features a 125% collateralization ratio with maturity on October 1st. A detailed guide on how to get started can be found here.

Ren and their RenVM play an enabler role in this new partnership by allowing users to lock BTC and mint renBTC, an ERC-20 representation of Bitcoin used as collateral to mint the yield dollar.

uUSDrBTC-OCT can be used to purchase more renBTC enabling users to take a leveraged long position on BTC, or you can also use the yield dollar to make other transactions.

A yield dollar is similar to a stablecoin with a few unique properties:

  • It has an expiry date (a perpetual is under works)
  • The price adjusts to the peg of $1 at maturity
  • It’s redeemable for $1 of the collateral asset at the exact time of expiry
  • Put together; the yield dollar represents a fixed-rate, fixed-term loan

UMA is a protocol for generalized financial infrastructure, with a focus on derivatives. UMA’s native token has experienced significant price appreciation since its Initial Uniswap Offering in April earlier this year. Their subsequent Coinbase listing in September added fuel to the fire, resulting in a 32% spike in token price around the time of announcement. 

 

Ren is a protocol that enables the permissionless transfer of value between any blockchain. Ren is currently the 9th largest DeFi project by TVL, according to DeFi Pulse. For those unfamiliar, Ren is behind the Ren Bridge, allowing users to port Bitcoin to Ethereum in a permissionless fashion without having to undergo KYC. We previously covered Ren as a part of their partnership with Synethix and Curve for the sBTC pool.

Why Does This Matter?

The introduction of the renBTC Yield Dollar comes as a big win for the growing Bitcoin-wrapper, marking the first innovative collateral issuance for renBTC since inception.

Historically, only WBTC has been supported on protocols like Maker when it comes to borrowing capital, making this partnership a steady stepping stone for renBTC’s legitimacy in the sector. On the flip side, UMA’s second yield dollar product further bolsters the capacity for permissionless derivatives, quickly rounding out a suite of innovate assets – like ETHBTC – which are only made possible by UMA’s unique infrastructure design.

For farmers looking for new ways to put their BTC to work, this liquidity mining campaign is one certainly worth keeping an eye on in the coming weeks.

To stay up with UMA, follow them on Twitter. To stay up with Ren, follow them on Twitter.