Farming rewards with XAI
When you become a liquidity provider in the XAI:FRAX:USDC Curve pool, you are entitled to earn a share of the rewards. All you need to do is add liquidity to the Curve pool and stake LP tokens in either the Convex Curve gauge or the Convex Frax gauge.
Users can use these steps to earn with their LP tokens.
XAI Silo: You can deposit ETH and borrow XAI at a fixed interest rate of 0.1%. We recommend you maintain a 50% Health Factor to ensure your loan is always properly over-collateralized and avoid liquidation.
USDC Silo: Deposit USDC and borrow XAI at a variable interest rate. Although both USDC and XAI are stable assets, we recommend maintaining a 10% - 20% Health Factor to ensure your loan is always properly over-collateralized and avoid liquidation. It's important to note that XAI is hard-coded to the value of $1 in the Silo Protocol, and as such, you are only subject to liquidation if USDC loses its peg.
If you choose not to borrow XAI, you can buy it from the market directly. At the time of writing this post, the best place to source XAI is through XAI/FRAXBP Curve Pool. However, it is also a good idea to use an aggregator like Matcha.xyz to hit multiple liquidity pools simultaneously. You can also achieve this with fewer transactions by depositing USDC or FRAX single-sided directly into the curve pool. (more on this below)
Ideally, you would deposit XAI, FRAX, and USDC in balanced proportions to the pool to maximize returns and minimize slippage. However, you don't have to provide XAI to become a liquidity provider.
If you hold only XAI, USDC, or FRAX in your wallet, you can deposit any combination of the three tokens into the XAI/FRAXBP pool, for example:
- USDC alone
- FRAX alone
- XAI alone
You can also deposit unequal amounts of any of the above combinations. Pay attention to the slippage you might incur upon deciding what to deposit and how much. Depositing an asset that the pool lacks will result in a net gain; this is called positive slippage, while depositing an asset that is in surplus will result in you incurring a small loss. This becomes more important when providing larger amounts of liquidity.
Say you want to add $3,000 to the pool. Now consider the following options:
- Option 1: Add all coins in a balanced proportion. This option yields 0% slippage.
- Option 2: Add 3,000 USDC only. This option yields 0.005% positive slippage.
- Option 3: Add 1,000 XAI and 2,000 USDC. This option yields 0.02% positive slippage.
Once you have decided on the tokens to deposit and amounts, proceed to execute the deposit transactions. You will likely be asked to sign the following transactions:
- One approval transaction for each deposited token. For example, if you are depositing XAI, FRAX, and USDC, you will sign 3 approve transactions. You only need to do this once.
- One deposit transaction.
Once transactions are confirmed, you will receive XAI/FRAXBP LP tokens in your wallet.
In order to earn rewards, a user has to stake their LP tokens in Convex. In addition, users have to option to stake them on either the standard Convex page, which will earn them $CRV and $CVX rewards with no time-lock required, OR they can be staked inside the Convex Frax gauge integration, which will give the above rewards with additional $FXS. If a user chooses the latter, they will be shown a range of APYs, with the lowest having only a 7-day lock-up and the highest being the maximum of 3 years.
Standard Convex Staking
You can need to stake your LP tokens in Convex to receive rewards. Note that you can stake it on standard Convex which will give you $CRV, $CVX, and FXS rewards with no time-lock required OR on Frax|Convex which will give the above rewards with additional $FXS but has a time-lock aspect.
- Select lock duration (1-52 weeks)
- Deposit & Stake