For synths that are pegged to ERC20 tokens (e. g. YD products), it may make sense to use a curve.fi metapool:
A metapool pairs a coin against the LP token of another pool. This other pool is referred to as the “base pool”. By using LP tokens, metapools allow swaps against any asset within their base pool, without diluting the base pool’s liquidity.
The factory allows deployment of metapools that use the following base pools:
- 3pool (USD denominated assets): 0xbEbc44782C7dB0a1A60Cb6fe97d0b483032FF1C7
- sBTC (BTC denominated assets): 0x7fC77b5c7614E1533320Ea6DDc2Eb61fa00A9714
It is possible to enable additional base pools through a DAO vote.
- Ability to trade the synth vs any underlying asset of the curve.fi native pool (a YD-3pool metapool would let you trade YD vs USDC/DAI/USDT)
- Low slippage which is quite important for users looking to sell the synth to buy it back later
- CRV rewards
- Easier UMA rewards distribution leveraging LiquidityGaugeV2 (The Curve DAO: Liquidity Gauges and Minting CRV — Curve 1.0.0 documentation)
- Synth exposure (curve.fi doesnt have that many pools so the pool would be clearly visible in the front page with it’s apy in the public attracting liq miners)
- I dont know, there are probably some downsides
This proposal goes in tandem with Proposal: Unifying YD style synths into one multi collateralized synth which aims to create a YD synth backed by multiple collateral in replacement of the current multiple YDs.