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The DeFi industry often presents interesting scenarios, such as the recent de-pegging of Bitcoin (iBTC). Cardano blockchain. IBTC, a synthetic asset created by depositing ADA as collateral, is currently experiencing significant price differentials.
For context, there is strong buying pressure on iBTC on Cardano, with the value of 1 iBTC rising to around 108,300 ADA. Conversely, in the broader market, 1 BTC equates to approximately 99,700 ADA, leaving a gap of 8.8%.
This discrepancy exists because iBTC’s exchange rate relies on a real-world price feed, not just Cardano’s DEX. As a result, people are minting iBTC at standard prices via the Indigo protocol, which has seen a surge in usage lately.
There are two main theories behind the increased demand for iBTC on Cardano. First, users may prefer the convenience of having her iBTC in their Cardano wallet rather than buying her physical BTC, especially if they want her BTC exposure. Secondly, the iBTC stability pool provided by Indigo made profits seemingly easy, prompting users to buy and deposit his iBTC on decentralized exchanges rather than collateralizing and minting it themselves. has become
In response to this situation, a unique strategy has emerged. Some market participants mint iBTC with a 110% liquidation rate and immediately sell the minted iBTC on the DEX to secure a hefty profit. As long as the price difference is more than 5%, you will still be profitable even considering the possibility of liquidation.
However, this strategy is not without risks. There is a time gap between the minting, selling and possibly liquidation of iBTC and the resumption of the process. It’s an open market and you may profit from price differentials, but be careful.
