Yield optimization protocols are among the major categories of the decentralized finance (DeFi) industry, along with decentralized exchanges (DeXs) and lending/borrowing protocols. Many of these protocols automate the entire liquidity staking process to maximize yields.
Popsicle Finance is one of these platforms. Its advantage is its ability to optimize your investment across a number of different blockchain networks.
Popsicle’s native token, ICE, currently trades at around $25, with a circulating supply of nearly 13 million tokens and a market cap of $314 million. Popsicle is ranked by CoinMarketCap between the 2,500th and 3,000th position among all cryptocurrencies. The total value locked (TVL) on the Popsicle platform is approximately $32 million.
What Is Popsicle Finance (ICE)?
Popsicle Finance is a cross-chain automated yield optimization platform. It manages your crypto investment by allocating it to various liquidity pools at DeXs to maximize yield. As such, it helps you take a more “hand-off” approach to yield optimization.
Instead of trawling through the vast variety of pools on DeX platforms, and attempting to figure out the best investment options, you let Popsicle be your automated portfolio manager.
A big advantage of Popsicle is the ability to allocate your investment across a variety of blockchains and protocols. Currently, Popsicle supports five platforms – Ethereum (ETH), BSC, Fantom (FTM), Avalanche (AVAX), and AnkrETH (AETH). However, the vast majority of activity happens on the first two of these platforms.
How Does Popsicle Finance Work?
Popsicle’s primary product is called V3 Optimizer. It offers yield optimization over 14 swap pools in total. Each swap pool represents a pair of cryptocurrencies traded on a variety of DeX platforms. In the future, more pools are in the project’s pipeline.
The current pools all have one coin in common – wrapped Ethereum (WETH). Each of the 14 pools represents a pairing of WETH with a second coin traded with WETH on DeXs. Some of the pools on offer include WETH/USDT, USDC/WETH, WETH/ICE, and FTM/WETH.
The liquidity pools have annual percentage rates (APRs), indicating the expected return, currently ranging from 20% (for WBTC/WETH) to 441% (for WETH/ICE). Unsurprisingly, the most popular pools are those offering the highest APRs.
The top 4 most popular liquidity pools on Popsicle Finance as of November 19, 2021. (Source: Popsicle.finance)
How does the ICE token work?
The ICE coin, in addition to being used in one of the more popular pools on the platform, is also used as Popsicle’s governance token. Ownership of ICE entitles you to participation in the voting process on the protocol. The platform aims to be a fully decentralized protocol with ICE holders in charge of its overall direction and potential changes.
At the first stage of the governance voting process, ICE holders may submit change proposals. The right of ICE holders to make such proposals is determined by the overall ICE fund ownership for the user. This includes ICE held in your wallet as well as staked in the liquidity pools.
The overall ICE ownership determines the user’s base “voting power.” This voting power is further adjusted to take into account how long the ICE funds have been held. If the user has held the ICE funds for at least three months, their voting power is multiplied by 1.25. Each additional three months of the funds’ ownership increases the multiplier by 0.25.
The maximum possible multiplier value is 2.0, which is applied to the base voting power for funds held for at least 12 months. This system is designed to encourage longer-term ownership of ICE.
The final adjusted voting power score determines if the user can make the proposal. The proposal then moves to the next stage where it needs to gather enough of the “support votes.” If there is enough preliminary support for the proposal, it is then moved to the final stage for the formal binding vote.
If the proposal gathers enough votes in the final stage, it is implemented automatically by the protocol. As such, Popsicle uses the on-chain governance model. The key characteristic of this model is the automatic implementation of any protocol changes when the vote is successful.
The August 2021 Major Hacking Incident
In early August, Popsicle suffered a major hacking attack that wiped out around $25 million from the platform. The entire hack was carried out in a single transaction via an address on the platform.
The hacker quickly converted the funds into Ether via Uniswap, then whisked the funds away to the Tornado Cash protocol, and proceeded to launder the funds via this platform. Popsicle Finance appealed to the hacker, offering $1 million as a reward for returning the stolen amount. The offer remained unanswered.
The incident was a major blow to the platform and badly damaged the trust in Popsicle’s security setup. To save the situation, Popsicle offered all those who suffered loss of funds in the attack a complete reimbursement. The reimbursement was offered in ICE tokens at a value of $29 per token, the market rate for ICE at the time of the offer, October 29.
It was reported that the reimbursed funds were drawn from the project team’s own token allocation, particularly from the funds of the founder Daniele Sestagalli.
Who Is Behind Popsicle Finance?
Popsicle Finance was founded by serial blockchain entrepreneur Daniele Sestagalli. There is minimal verified information online about the project’s origin, management team, or financials. The founder himself is an active Twitter user, but not a great deal is known about him either.
One thing is certain – Mr. Sestagalli loves launching blockchain projects. In addition to Popsicle Finance, Sestagalli is featured as the founder of two other DeFi platforms, Wonderland (TIME) and Abracadabra (MIM). He is also mentioned as the ex-CEO of the now defunct blockchain platform Zulu Republic.
Popsicle’s documentation pages mention that the project’s team is made up of professionals who have been “full-time in the cryptocurrency space” since 2015. However, there is little information on project history or milestones. Popsicle’s Ethereum address registered the first transactions in April 2021, while its BSC address had the first transactions in August 2021.
Popsicle reports having had no less than three audits done on its platform. These audits were conducted by blockchain security companies Certik, Quantstamp, and Certora. The results of the last audit, by Certora, are yet to be publicly released by the platform. The audits by Quantstamp and Certora were conducted after the August hacking incident and are likely an attempt by Popsicle to restore trust in the platform among the wider blockchain community.
ICE Price History
ICE was first listed on CoinMarketCap in April 2021, trading at around the $3 mark.
Its rate just before the early August security breach was around $2.20. Immediately, following the attack, ICE halved in price to $1.10.
However, the token quickly recovered to levels above $2 by late August. Around mid-September, ICE started appreciating rapidly and reached its first local peak level of $33 by late October. It fell to $24 by the end of the month, but, as the news of the full reimbursement for the users who lost funds in the August attack was announced, ICE catapulted to its highest ever price of nearly $67 by early November.
However, this was a short-lived spike, and by now, the token trades back at $24. After the wild ups and downs over the last few weeks, ICE is still worth about 10 times more than it was as recently as mid-September.
The price of ICE from April 2021 to November 2021 (Source: CoinMarketCap.com)
Conclusion
Popsicle Finance is a cross-platform yield optimization protocol. It offers yield optimization in DeX-based liquidity pools across five platforms in total, although the actively used platforms at the moment are limited to Ethereum and BSC.
The project suffered a major security breach in August, when $25 million was wiped off the platform in a single transaction. Popsicle responded with a full reimbursement of the lost funds to all affected users. It also conducted two additional platform audits to boost trust in the project.
The project was founded by blockchain entrepreneur Daniele Sestagalli, but limited other information is available about the project’s origins, core team, or financials.
In the last two months, the ICE token has experienced rapid growth, appreciating 10-fold in value. Part of the growth was driven by the platform’s announcement about the full reimbursement of the funds lost in the August attack.
Popsicle Finance offers a valuable cross-platform service, but its core offer is in direct competition with the giants like Convex (CVX) and Yearn.finance (YFI). It remains to be seen if the platform manages to grow into something larger than what it represents now.
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