Crypto Academy Week 15 | Homework post for @sapwood [Liquidity Mining]
The defi world
In the ever-changing and innovative defi world, during recent times we have seen the increasing development of all kinds of applications, platforms and results produced on a trial-and-error basis. Volatility in the cryptocurrency market is a reality that no one can ignore in the crypto universe, however, it is an undeniable fact that blockchain technology has allowed unleashing the imagination of countless developers around the world.
The possibility of replacing traditional finance systems is now at our fingertips and everything being much more decentralized, transparent and simple than before. In this case we will talk about liquidity mining, a process by which users of a specific network provide liquidity through the freezing of assets and are consequently rewarded for it.
The act of freezing assets and providing liquidity is generally rewarded with governance tokens from that space and can be used to gain more leverage or rewards. This modality has caused a furor in many ecosystems and ended up triggering the rise of several platforms such as Uniswap, Balancer, AAVE, Curve, and Yearn.finance. Similar to bitcoin, this all started quietly and then exploded with incredible force.
One of the largest decentralized exchanges prior to DeFi, IDEX, first introduced liquidity mining in October 2017. Two years later, derivatives liquidity protocol Synthetix redefined what liquidity mining is with the help of decentralized oracle provider Chainlink. Finally, new decentralized exchanges such as Uniswap and Compound popularized liquidity mining in 2020. Source
Now that we have an overview of things, next we will learn the pertinent details on how to take advantage of this wonderful tool in the TRON ecosystem. For this task I will use the Tronlink wallet which can be downloaded as an extension of the Chrome browser on the computer.
Step 1 [Connected]
To connect our wallet to sun.io, we first enter the address of the page in our browser.
Once the page is loaded, we go to the Tronlink extension to log in.
Once we have logged into the Tronlink extension, the sun.io page will automatically refresh.
When the page has loaded again, we can verify that we are logged in by placing the mouse arrow on the gray bar in the upper left corner.
Mining Pools, APY, 5 Rewards
The sun.io platform offers a wide range of investment options, all of them with different APY and small bonuses divided into 5 different tokens. We can classify them as follows:
| Commercial pair | Total APY | Mining speed | Mining bonus |
|---|---|---|---|
| USDT-TRX LP | 4.12% | 70 | TRX 1.42% SUNOLD 0.85% JST 0.84% BTT 0.72% WIN 0.27% |
| USDJ-TRX LP | 5.63% | 70 | TRX 1.94% SUNOLD 1.16% JST 1.15% BTT 0.99%WIN 0.37% |
| TUSD-TRX LP | 17.51% | 42 | TRX 6.05% SUNOLD 3.62% JST 3.57% BTT 3.08% WIN 1.16% |
| SUNOLD-TRX LP | 36.04% | 42 | TRX 12.48% SUNOLD 7.43% JST 7.36% BTT 6.36% WIN 2.39% |
| WBTT-TRX LP | 6% | 42 | TRX 2.07% SUNOLD 1.23% JST 1.22% BTT 1.06% WIN 0.39% |
| JST-TRX LP | 5.52% | 42 | TRX 1.91% SUNOLD 1.13% JST 1.12% BTT 0.97% WIN 0.36% |
| BTC-TRX LP | 5.56% | 28 | TRX 1.92% SUNOLD 1.14% JST 1.14% BTT 0.98% WIN 0.37% |
| ETH-TRX LP | 3.92% | 14 | TRX 1.35% SUNOLD 0.8% JST 0.8% BTT 0.69% WIN 0.26% |
| WIN-TRX LP | 7.56% | 14 | TRX 2.62% SUNOLD 1.54% JST 1.54% BTT 1.34% WIN 0.5% |
It is worth mentioning:
- TRON Century Mining rewards APR is calculated in accordance with real-time market prices and is subject to market change.
- The mining speed for the second phase of the TRON Century Mining will be adjusted on a weekly basis according to market changes.Source
As we can see, the trading pair with the highest APY is the SUNOLD-TRX LP with an incredible 36.04%, followed by the 17.51% TUSD-TRX LP. They all offer the same tokens as rewards, albeit in different percentages, and those trading pairs with a higher APY offer a better mining bonus than the others.
Obtaining LP token [adding liquidity]
To be able to add liquidity and get LP tokens, first we must choose a pool, once we have made a decision, through the sun.io page we will click on the trading pair where it says "Get" in my case it would be "Get TUSD-TRX".
This will send us to the "justswap" page, in which our first task will be to exchange TRX for TUSD, since both are needed to exchange it for the LP token.
To make the change successfully, remember to have enough TRX in your wallet in case you need to burn them to compensate for the lack of "energy". Ideally 40 TRX. If you have enough energy to carry out the transaction or enough TRX to burn, then you must enter the amount to exchange, in my case I exchanged 20 TRX for 1.3 TUSD. Don't forget to put in the address that will receive the coin and set the "slippage" level so that it is not too low, otherwise the transaction may fail.
Finally, confirm the transaction for it to go through.
Transaction Details
Transfers from TRC20: 20 TRX for 1.374142587481379497 TUSD
Bandwidth: 383
Energy Consumed: 47,734
TRX burned: 6,68276 TRX
Now that we have both TRX and TUSD, we can redeem them to add liquidity and get LP tokens. We login to justswap again, but this time we will use the "pool" option. We enter the amount of TRX tokens we own and the TUSD will be adjusted automatically. Then we can see a box in which our wallet will be synchronized and we must give a confirmation to complete the transaction.
Transaction Details
Transfers from TRC20: Add 20 TRX and 1.366821052021371659 TUSD, Receive 14.722348S-TUSD-TRX LP Tokens
Bandwidth: 383
Energy Consumed: 67,782
TRX burned: 9.48948 TRX
Thanks to this, we now have LP tokens and can use it to generate passive income.
After selecting the number of LP tokens to be frozen, the platform will ask for a confirmation and after accepting the transaction will become effective in a short time.
Transaction Details
Transfers from TRC20: Approval of mining
Bandwidth: 313
Energy Consumed: 89,638
TRX burned: 12.54932 TRX
Withdraw rewards
The mining pool is basically a long-term career, although a small part of the rewards can be withdrawn, most of them take up to 6 months to reach the investor's hands.
10% of the total LP pool mining rewards (i.e. 33% of the total SUN rewards) can be withdrawn at any time. The remaining token rewards, including TRX, BTT, JST, SUN, and WIN will be unlocked once a week, and will be unlocked within 24 weeks.Source
Claiming these rewards can be done easily through the platform by clicking on the "Claim" button as shown in the following image.
As the fixed time elapses, which is 24 weeks. We will be able to see how the distributed and undistributed rewards change. The more time passes the higher the reward will be.
So far, I have consumed a certain amount of trx by burning transactions. If we make a comparison, we can notice some differences:
| Resources used in transactions | justswap | Stake on sun.io |
|---|---|---|
| Bandwidth | 383 | 313 |
| Energy Consumed | 67,782 | 89,638 |
| TRX burned | 9.48948 | 12.54932 |
As we can see, we must be careful with transactions carried out on sun.io, as they require larger amounts of energy than exchanges on justswap.
Last but not least. If we want to stop mining then we must access sun.io again and look for the mining pool in which we have invested. Select the "manage" option and then press the "MAX" button to withdraw all our assets, then click on "Claim and Unstake".
You will then be asked for a confirmation to complete the transaction.
Unfortunately, as far as I am concerned, the transaction to withdraw the rewards and LP tokens failed. I ran out of TRX. It's a pity, but I don't have so many funds to invest, much less to do practical exercises like these, however, my wish is that someday I will have the financial capacity to achieve this. I have set this goal and my first goal is to get 1000 TRX to achieve it. With this I will be able to greatly reduce the expense of transactions like this where you have to constantly burn TRX.
This is my first assignment in crypto academy, I hope professor @sapwood is not too upset because I have been late. Please excuse this unpunctual student who just wants to learn new knowledge. I will try to improve myself as much as possible and I would be very grateful if you could give me some advice.
Sincerely, thank you.
Thank you for attending the lecture in Steemit-Crypto-Academy- Season 2 & doing the homework task-7.
33% of the SUN can be withdrawn at any time. Rest of the SUN(i.e. 67% of the SUN) along with the remaining 5 tokens can be unlocked on a weekly basis over a total period of 24 weeks. So you will get weekly rewards.
Suggestions/Feedback:-
Thank you.
Homework Task -7 accomplished.
[5]