This is a weekly tutorial on the most compelling opportunities to consider yield farming, written by our friend DeFi Dad, an advisor to the Defiant and member of the core team at Zapper. The goal is to expose more Defiant readers to new DeFi applications and their associated liquidity mining programs.
Background on Protocol: Last year has clearly proven that the world of DeFi and NFTs are merging under one grand umbrella of blockchain-based ownership, which will power a future Metaverse. The digital land will likely be where we’ll spend most of our time in the future.
Charged Particles is one protocol looking to further strengthen this foundation of DeFi and NFTs building new hybrid applications. Charged Particles enables us to create new digitally native baskets of tokens, NFTs, and other charged particles.
The name “charged particle” derives from what you get when you nest an NFT or token inside another NFT. Imagine you have a digital piece of art in the form of an NFT. You can “charge up” the NFT by depositing one of the following using the Charged Particles protocol and UI:
- A token like ETH or one that’s interest-bearing like ibBTC, yUSD, aDAI
- Another NFT
- Another charged particle
Opportunity: Today, we’ll focus on how to earn the governance token IONX, which is necessary to have a voice in the future upgrades and proposals of this Charged Particles protocol. To distribute IONX, the Charged Particles protocol offers liquidity mining rewards through 2 programs:
- Staking IONX at a rate of 383% APR*
- Staking the IONX/ETH LP on Uniswap V2 at a rate of 821% APR*
*Both estimated APRs are calculated with a market price of $0.80 per IONX.
All IONX rewards are issued in weekly epochs which complete every Tuesday at 4:00 am UTC. One must remain in either staking pool until the epoch completes or else they forfeit their accrued IONX rewards.
Time to Complete: 10-15 mins if paying the recommended FAST gas price on gasnow.org
Gas + Protocol Fees: Based on the FAST gas price on gasnow.org currently between 15-30 Gwei with ETH at $2500, I would estimate paying the following gas fees.
- Trading for IONX = $6 to $20
- Adding liquidity to IONX/ETH LP = $25-$50
- Staking LP or staking IONX = $10-$20
Fees: There are no fees other than the usual Ethereum network fees you pay as gas to miners to confirm your transactions.
Risks: As always, this is not financial advice and you should do your own research. The following are risks when participating in this opportunity.
- Smart contract risk in Charged Particles and Uniswap contracts
- Oracle failure
- Liquidity crisis
- Systemic risk in DeFi
- Estimated APRs can go up or down with the price of IONX and pool liquidity
- Staking IONX or holding the IONX/ETH LP exposes me to the volatility of the price of IONX. There is no guarantee that IONX price won’t go down while I’m in the farm.
- If I become an LP for IONX/ETH, I’m likely to experience impermanent loss.
- First, go to rewards.charged.fi. Check the reported stats for valued staked in either the IONX/ETH LP contract vs the IONX staking contract. As of this writing, I’ve estimated the IONX/ETH LP rewards to be ~821% APR vs~383% APR staking just IONX. Based on these numbers and my desired exposure to the price of IONX vs 50/50 IONX/ETH, I can choose which farm to enter.
- Assuming I will need to buy IONX first, I can trade any token for IONX using this link on Uniswap V2. BE SURE TO CHOOSE “GET A BETTER PRICE ON V2.”
Choose the blue option to trade on Uniswap V3
- If one wishes to participate in the IONX/ETH LP, go here on Uniswap V2 to add liquidity with both ETH + IONX in equal proportions. It will require 1 Approval to spend IONX and then 2 Deposit transactions to deposit ETH and IONX. AS OF THIS WRITING, I WOULD NOT DEPOSIT INTO UNISWAP V3 BECAUSE CHARGED PARTICLES DOESN’T REWARD LPS IN V3.
- Then go back to the Yield Farming tab on the IONX Rewards Program page.
- On the right, one can find the IONX Staking option and click the Stake IONX button. Then specify how much IONX to deposit, choose to Approve to give permission to deposit IONX tokens, confirm on MetaMask, and click Deposit followed by a MetaMask confirmation.
- On the left, one can find the IONX/ETH Staking option and click the Stake IONX/ETH button. Then specify how much IONX/ETH to deposit or click Max, choose to Approve to give permission to deposit IONX/ETH LP tokens, confirm on MetaMask, and click Deposit followed by a MetaMask confirmation.
- Return to this dashboard anytime after Tuesdays at 4 am UTC or later to use the Harvest option to collect earned IONX. Remember, if one withdraws before the weekly epoch completes, they forfeit all IONX rewards earned for the week.
About Author: DeFi Dad is a DeFi super-user, educator, and investor. You can subscribe to his YouTube channel at defidad.com, catch new episodes of Zapper TV every Friday, and get started on your DeFi journey with Zapper Learn.
Disclosure: DeFi Dad is an advisor to Charged Particles. This is not an endorsement or recommendation to buy IONX. Please do your own research.