WhiteWhale Protocol: Democratizing Arbitrage

A litepaper summary.

There has been some excitement around WhiteWhale Protocol and they have finally launched their litepaper! Let’s dive in. 

WhiteWhaleTerra has two main goals.

Goal 1: Democratizing arbitrage to the average user.

Arbitrage requires capital, in-depth knowledge, and bot infrastructure. All of which are not usually available to regular DeFi citizens. This leads to the next goal of White Whale.

Goal 2: Keeping the $UST peg (this is arguably the more important goal).

By democratizing arbitrage, the Terra community is able to enforce the $UST peg while enjoying delta-neutral profits. @WhiteWhaleTerra also aims to create a demand pool for $UST deposits, more on this later.

So…how does it work?

The WhiteWhale platform consists of 3 components, all of which utilize Anchor Protocol for capital efficiency. $WHALE tokens will also be used to reduce volatility across the platform.

Component 1: Arb Vaults

The main character of the platform, Arb Vaults will be divided into single-asset vaults. Deposits serve as liquidity to be deployed by bots into multiple arbitrage strategies whenever the opportunity arises.

$UST Arb Vault:

  • Arbs $UST back to peg by automating the level 1 seignorage method.

  • Arbitraging $UST over multiple DEX's like Astroport & Terraswap is in development and will be added in the future to the $UST Arb Vault.

WhiteWhale also plans to automate liquidations on Anchor, Mirror, and Mars Protocol. Borrowers who are liquidated by the arb bots will receive WhiteWhale NFTs as consolation!

What happens when $UST is on peg and no arbitrage opportunities are available?$UST is deposited into @anchor_protocol for yield, the resulting $aUST will be used to generate additional yield.

In the future, these strategies for $aUST may include:

$LUNA Arb Vault

This vault will be arbing the $LUNA / $bLUNA pair on Terraswap. In the future, strategies may include arbing:

  • $LUNA across multiple DEXs

  • $LUNA against $pLUNA & $yLUNA

Other Arb Vaults

Besides $UST and $LUNA, other single-asset vaults for other Terra-native assets like $ANC & $MIR can be introduced. These will be decided by the community via governance proposals.

Component 2: The War Chest

An ecosystem treasury governed and controlled by the community, the War Chest will hold multiple assets, both native and non-native.

WhiteWhale plans to leverage the Olympus DAO model of swapping bonds (discounted $WHALE + vesting) for specific assets to bootstrap their single-asset vaults or its own liquidity pool (READ: Protocol Owned Liquidity).

There was some hype surrounding WhiteWhale that it's going to be the $OHM of Terra, but do understand that $WHALE is not the free-floating currency that $OHM is. Rather, $WHALE plans to adopt bond swapping & POL that $OHM has made so popular.

I Spoke to Sebastian, founder of WhiteWhale and this is what he said:

"Unlike $OHM, $WHALE is not seeking to be a stable reserve currency for digital assets, however, it will leverage the Olympus DAO bond model to accumulate assets into its War Chest...

...which will not only include owning its own liquidity but also assets that will ultimately be used to arbitrage and stabilize the entire ecosystem. All of these assets will be under community led governance via The Guardian Whales DAO..."

Essentially, $WHALE stakers can add or remove trading strategies, adjust trading parameters, and issue new $WHALE bonds via governance proposals.

Component 3: The Community Fund

With the War Chest being the community-owned savings account, the Community Fund is the community-owned spend account of the protocol.

This fund can be used for the development of the protocol as decided by $WHALE holders via governance proposals.

The Governance Token

  • Functions as the utility token that provides ecosystem stabilization features

  • The only token providing access to multiple arbitrage and other yield-bearing opportunities across the ecosystem from one vault

  • A portion of $WHALE will be rewarded to users providing liquidity and/or participating in governance proposals

Tokenomics

Prior to the token generation event (TGE), unassigned tokens might be burned to limit total supply or redistributed to the treasury (Community Fund).

Roadmap

Nov-Dec 2021 - Testnet, live arb testing
Jan 2022 - Community IDO Events
Jan-March 2022 - Mainnet launch
Q3-4 2022 - V2 Expand Arb Vaults to addition assets
2022-2033 - Cross-Chain arbitrage

Thoughts

WhiteWhale Protocol democratizes arbitrage for the average DeFi user and safeguards the $UST peg. What more do I have to explain for you to get behind it? NFA.

Links

Website: https://whitewhale.money/

Twitter: @WhiteWhaleTerra

Litepaper: https://www.whitewhale.money/Litepaper.pdf

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