Arbitrum has been unbearably boring as of late. My niche is finding and trading small cap DeFi protocols on Arbitrum and since I’ve been sidelined watching (coping) the TG Bot & animal racing meta, and losing money on shitcoins while Arbitrum coins are dead, it hasn’t been easy for me.

That is why I was happy when a new protocol hit the DM’s. Prismic Protocol.

They sent me their docs and pitch deck. Shortly after reading what it was about, I realized it all looked so familiar. If you’re aware of GMD and GND protocols, also on Arbitrum, then you should know what Prismic will be about. If not, allow me to try and break it down.

If you know of GMD and GND Protocol and how they work, then feel free to scroll to the bottom for my thoughts on Prismic Protocol.

Their pseudo-delta neutral vaults are built on top of GMX’s GLP and allow you to stake ETH, BTC, USDT, or USDC. In return you will receive a receipt token, prismTOKEN (prismETH, prismUSDC, etc.).

These receipt tokens earn yield from GLP. Your tokens get deposited into GLP and they hedge to make GLP delta-neutral, in return only earning ETH rewards from GLP, which are auto-compounded.

So, holding your prismTOKEN earns auto-compounded yield from GLP while staying pegged to the token you deposited. You can withdraw your staked tokens at any time and receive your deposit + auto-compounded rewards.

prismTOKENs appreciate in value at their APY rate.

Here is a screenshot from their docs that describes their Delta Neutral Mechanism.

I recommend reading their docs if you’re interested in understanding how it works.

This would be comparable to GND Protocol. Prismic will allow you to create LP’s (ie. WETH-USDC / PRISM-WETH) and they will utilize the highly efficient, Uni V3 concentrated liquidity.

This allows Prismic to earn trading fees that are used to reward xPRISM stakers and perform PRISM buy-backs.

Rewards look to be 25% PRISM (liquid), and 75% xPRISM (requires vesting).

To keep it short, $PRISM rewards can either be staked for xPRISM, or sold via a DEX.

xPRISM rewards can either be staked to earn protocol revenue from vault deposit fees and Uni V3 positions (WETH rewards). xPRISM is not liquid and will require vesting in order to convert it to $PRISM.

2 Vesting options from xPRISM to PRISM will be available:

pUSD is their yield bearing stable coin that is backed by:

pUSD will earn yield from GLP + gDAI.

Check their docs here for more info on pUSD and the mechanism in place to keep it’s $1 peg.

I may just be excited because there hasn’t been anything worth aping on Arbitrum, but there may be potential for a quick trade here, and potential medium-term hold.

I’m not sure who is on the Prismic Protocol team or if they have any prior experience, but it may be hard taking TVL away from GMD/GND which have proven to be builders that take ideas from other protocols and innovate on top of them.

Both GMD and GND have been successful because of the results and real yield provided to holders and stakers. Prismic would be a direct competitor and will need some new innovations, or more incentive to take TVL away from GMD/GND. Not only new innovations and incentives, but they will also need to build trust.

As always, dyor, and never invest more than you’re willing to lose.