Single-Sided Staking
When you look at a liquidity provision on an AMM that needs pairs of assets, a single-sided stake allows you to earn a yield providing liquidity for one specific asset. For instance, if you use SaucerSwap, they use a stake known as SAUCE in their Infinity Pool. As a result, you receive a liquid receipt token known as xSAUCE.
In this case, the xSAUCE to the SAUCE starts at one, increasing in perpetuity as the pool automatically compounds via the SAUCE buybacks and other farm emissions. So, you can stake an xSAUCE in the community pool and earn HTS tokens from the projects incubated by the HeadStarter.
The token you can use for liquidity provision and governance is the Solana AMM. But what does this mean?
You Get Triple Rewards
In this type of model, you can derive from three specific sources:
- Swap the fees across all the SaucerSwap liquidity pools
- You can yield the farm emissions
- And you can get HBAR native staking rewards
With the last option as an example, the reward mechanism consists of staking all the HBAR into the WHBAR contracts in a permission node. The structure will look as follow:
- The protocol fee of 0.05% on all token swaps incurred accumulates in the feeTo account via the Uniswap v2 smart contracts.
- Next, the revenue will go to the DAO treasury but is relocated to the SAUCE buybacks called the Mothership or Infinity Pool once that single-sided staking gets implemented.
- Now the Brew contract will be authorized to withdraw the LP tokens from that feeTo, and it burns them into itself at the point that it swaps the underlying assets, for example, token 0 and token 1 for a WHBAR and SAUCE using a user-specified bridge authorization. Again, these are token addresses to help facilitate a conversation with the SAUCE.
- Next, once the bridge swaps are complete, that contract pulls the HBAR native staking reward from the intermediary payment splitter contract. Then the HBAR is wrapped and added to a Brew contract with WHBAR balance.
- Thus the final swap will take place as a conversation of the WHBAR to the SAUCE and results in the SAUCE being the only token available in the Brew contract.
So, the result is that 3% of the SAUCE token emissions from the farming contract with the SAUCE are then sent to the Infinity Pool. As the balance of the SAUCE is in the Infinity Pool, it increases, and the SAUCE’s ratio to xSAUCE is also. Thus the relative value of the xSAUCE to the SAUCe also increases. As an example:
- You are the first user to stake a SAUCE in that pool and deposit ten SAUCe to receive 10xSAUCE; thus, the ratio is 1:1.
- Then you have 10 SAUCE derived from the swap fees, thus HBAR native staking reward, then farm emissions that are sent to the Infinity Pool. As there are 20 SAUCE available in the contract and the total supply is ten SAUCE, the ratio changes to 1xSAUCE: 2SAUCE. Based on that ratio, you can now redeem your ten xSAUCE for the 20 SAUCE whenever you want.
- But if you do not redeem your xSAUCE and another user deposits another 10 SAUCE, and the ratio is 1:2, they get half of the deposit as the xSAUCE is now 5xSAUCE. Hence the pool now has 30 SAUCE with 15 xSAUCE as it maintains the ratio.
The only time the ratio changes are when SAUCE is sent to the pool and distributed equally among all the xSAUCE holders, as each xSAUCE will become more worthy than the original SAUCE.
Final Thoughts
When you look at the APR single-sided staking, the formula will look as follows: The Infinity Pool APR equals the [(SAUCE/xSAUCE) over (SAUCE/xSAUCE) minus1] time 365 times 100. The SAUCE/xSAUCE is your balance of each token found in the Infinity Pool and taken as an exchange rate. The rate updates once daily and subscripts to f-i
Originally posted 2022-12-09 09:26:46.
