Rewards for a Bigger Leap
Version 1.0 of non-native Liquidity Provision on the TIDEFI Platform
If you are an avid user of decentralized exchanges, you will know and expect to earn yield on the funds that you lock in decentralized protocols to provide liquidity. Actually, any participant in the financial system rightly expects returns for their deposits. The unique architecture of the TIDEFI exchange requires and enables us to be even more creative in how we reward you, our community, for liquidity provision. Let’s run you through it!
TIDEFI Liquidity Staking Version 1.0
The concept of a Central Limit Order Book and being able to make markets through our advanced interface do not actually require additional liquidity provision for our exchange to function — it makes it better though. In the initial version of liquidity staking, staked funds on the TIDEFI platform will simply be locked on Tidechain and earn yield for you.
In order to increase stability of the platforms, the longer you choose to lock funds, the higher your participation in the DEX revenue for the corresponding market will be. The table below highlights the different options:
So what does this mean? How is the final yield calculated? This follows a simple formula:
Where n denotes a given currency, t the corresponding time and the Reward is a function of the lockup period as explained in the table above. Note that the pool size has to be calculated considering both sides of a given market. In other words this means that for every traded pair that you provide liquidity to, you will get a proportion of the exchange revenue based on your share of the corresponding pool multiplied with a factor that is determined by the overall lock-up period.
An Example
As an example, let’s assume that you provide 1 BTC of liquidity for 90 days and BTC is traded against ETH and TDFY on the exchange. The total staked amount of BTC is 10, so you provide 10% of the BTC Pool. There is a total volume of 10000 BTC on the BTC/ETH market and 5000 BTC on the BTC/TDFY market. Note that the exchange fee is 0.25% on all trades. Let’s assume furthermore all this stays constant over the full period. In reality, rewards are calculated based on your share in each epoch.
The total exchange revenue for the BTC/ETH Pool is 10k BTC.
Revenue share = 0.30% * 10000 BTC = 30 BTC,
50% of that go to the ETH liquidity providers naturally so the remaining balance is 15 BTC.
Of the remaining 15 BTC you are entitled to 5% * your pool share of 10%, i.e. 5% of 1.5 BTC or 0.075 BTC.
Based on the fact that the BTC/TDFY market made half the revenue, this will yield you an additional 0.0375 BTC and a total of 0.1125 BTC in just 90 Days. Now you do the math to calculate the actual APY on this.
Obviously it is important to note, that these are fictional numbers and in reality, owning 10% of the BTC pool will be very difficult to say the least but as always in life: The early bird catches the worm and we expect juicy APY especially in the first few months after launching the TIDEFI.
What happens with my funds and is there a catch?
In the initial version of TIDEFI liquidity staking, your funds will simply be locked on a smart contract on Tidechain. The only thing to be aware of is that it takes time to unlock your funds prematurely. Concretely, unlocking your funds will take 4 epochs or roughly ~24 hours and incur a 1% fee on the staked amount. You will receive your staked amount as well as the rewards you have accrued over the past time period. Allowing the stake to end naturally will incur no fees. Please note that this if different from staking TIDEFI´s native currency, TDFY, that is bonded to a validator.
A Peek into the Future: More Options, Higher Yield
While we are working hard to release the 1.0 version of the TIDEFI App and mainnet very soon, we are already working on the future iterations to empower you, our community with even more choices and opportunities. As such we work on decentralized lending, A.I. enhanced staking and other exciting innovations to unlock the full potential of #defiforyou.
In the meantime, follow us on Twitter to stay up to date with what we do, engage with our community on Discord and stay tuned for more information on our onboarding incentives and bold plans.
