Architecture

Overview

The infrastructure of acBTC, to its simplest form, consists of three components: ACoconut Swap(acSwap), ACoconut Vault(acVault) and ACoconut BTC(acBTC).

ACoconut Swap

ACoconut Swap is an exchange that manages the underlying tokens in the baskets and bootstraps the value of ACoconut BTC. For more information about acSwap, please refer to the section acSwap.

acSwap is the only minter for acBTC. Minting acBTC is identical to adding liquidity in Curve.fi: users only need to deposit underlying tokens to the swap. After receiving the additional tokens, acSwap computes the new value of D, and mints new acBTC equal to the difference between new D and old D. Users receive acBTC instead of the LP tokens in Curve.fi.

ACoconut BTC

There is one big difference between acBTC and Curve.fi’s LP token: LP token is essentially a yield token whose value grows as transaction fee accumulated in the swap. This generates profits for LP but makes LP token’ price volatile and dependent on the swap performance. Therefore, LP tokens are mostly used for staking purposes and cannot be used as a payment method. By separating token base value and yield, acBTC can maintain good peg with native BTC without being affected by the price fluctuation of individual ERC20 BTC tokens. It can be thus used as loan collateral or a payment method.

ACoconut Vault

The separation of acBTC base value and acSwap transaction fee does not mean that acSwap LP, or acBTC holders lose their profits from the swap transaction fee. Instead, the swap transaction fee is forwarded to acVault, which serves as a saving protocol for acBTC. acBTC holders can stake acBTC into acVault to earn yield originated from the swap transaction fee. For more information about acVault, please refer to the section acVault.