[SIPS-075] Upcoming Proposal to Replace the Cellar Adaptor in RYBTC

[SIPS-075] Upcoming Proposal to Replace the Cellar Adaptor in RYBTC

The purpose of this forum post is to discuss the upcoming proposal to replace Real Yield BTC’s Cellar Adaptor with a new one (we will refer to the old adaptor as V1 and the new adaptor as V2).

The Cellar Adaptor is the functionality that enables a Cellar to take positions in other Cellars. Currently Real Yield BTC is able to take positions in Real Yield ETH using the V1 Cellar Adaptor.

The limitation with V1 is that interacting with a Cellar is a highly expensive operation. This means that if RYBTC were to use the V1 Cellar Adaptor to add liquidity to RYETH, all Cellar operations (deposits, withdraws, rebalances) would be significantly more costly.

This is where the benefit of the V2 Cellar Adaptor is. The way the new adaptor works is that instead of computing RYETH share price on every RYBTC action, it reads share price from a share price oracle which is updated with some frequency (and based on a share price deviation).

The share price oracle is monitoring RYETH share price and updating if a certain amount of time has elapsed, or if RYETH share price is sufficiently different from the last oracle update (this ensures that the oracle is only filtering out small noisy fluctuations in share price but still capturing meaningful changes to share price).

The advantage of this approach is that RYBTC does not have calculate RYETH share value on-chain (which is an expensive operation) but can use the pre-computed oracle value.

The deployed V2Cellar Adaptor can be found at the following address: LegacyCellarAdaptor | Address 0x1e22adf9e63ef8f2a3626841ddddd19683e31068 | Etherscan

(Note that it’s called “LegacyCellarAdaptor” because it is an adaptor that points to V2 Cellars rather than V2.5 Cellars which have the oracle pricing mechanism built-in).

If the proposal passes, a Steward update will enable the deprecation of the V1 Cellar Adaptor and the addition of the V2 Cellar Adaptor to RYBTC.