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Idle & CelsiusX unveil QuickSwap PYTs on Polygon: welcome cxETH!

Idle is delighted to announce the launch of a Perpetual Yield Tranche based on QuickSwap in partnership with CelsiusX.

CelsiusX and Idle partner up to release Perpetual Yield Tranches (PYTs) using QuickSwap, for the very first PYTs product on Polygon.

Now also for Polygon, PYTs allow you to leverage yield or protect your savings through their tranching mechanism: different products to match your personal yield and risk profile.

This collaboration starts with the release of QuickSwap PYTs on top of the cxETH-WETH market and an initial deposit of $10m worth of LP tokens to initially seed the pool.

QuickSwap PYTs

As Senior/Junior APYs are both dynamic, the market will organically start pricing in the perceived risk profile of the underlying protocols, deciding the premium given to Junior for the borne risk. If you want to simulate the APYs with different liquidity scenarios, you can find a nifty PYTs simulator here.

Liquidity Flywheel: A New Paradigm for PYTs

Starting today, users will be able to access two risk profiles of the cxETH-WETH pool by depositing their LP tokens in the Senior or in the Junior Tranches.

In exchange of a share of the underlying yield, a deposit into Senior Tranche gives users the priority payout in case of any loss — a built-in coverage for deposits, based on Junior liquidity. Conversely, a deposit into Junior Tranche generates an overperforming return compared to the native APYs, as compensation for covering the financial and technical risk.

PYTs have been conceived as a product that segments risks associated with any yield source and focus on protection features. Yet, we’ve been recently researching the concept of liquidity flywheel: PYTs can enable DAOs and token issuers to create deep liquidity on AMMs by organically boosting the Junior APY without sacrificing their treasuries for blind liquidity mining.

The allocation of a portion of a treasury’s assets into a set of conservative yield-generating strategies can not only decrease this opportunity cost by enhancing a DAO or protocol’s revenues but also allow for better planning and meeting their main objectives. At the same time, DAOs and token issuers can leverage the increased Junior APY created by a deposit in the Senior class to bolster their on-chain liquidity while removing sell pressure on their governance token. Blind liquidity mining, say no more.

Regarding cxETH-WETH pool, the co-incentivization program between Polygon and QuickSwap allows liquidity providers to earn trading fees and dual mining rewards (MATIC and dQUICK). PYTs now allow users to auto-compound accrued MATIC and receive dQUICK as staking rewards, with no locking periods — users can enter and exit anytime.

A step-by-step guide on how to deposit, bridge and stake LP tokens into the cxETH-WETH pool can be found in our Docs.

dQUICK tokens represent staked QUICK, the QuickSwap’s governance token. The protocol uses a portion of accrued trading fees to market buy QUICK and distribute to stakers.

By farming dQUICK, you increase your share of protocol ownership and can vote on Snapshot, or provide liquidity into the dQUICK-QUICK pair (41% APY at the time of writing).

Looking Forward: Scaling cxToken Liquidity

As mentioned above, PYTs deliver a powerful alternative to traditional liquidity mining programs — while also being highly liquid instruments (PYTs can enable DAOs to easily exit their position early at the prevailing market interest rate if they ever encounter an urgent liquidity need), they can preserve a conservative yield profile to keep treasuries growing and find an alternative to blind liquidity mining by enabling opportunities for more risk-on DeFi users.

Amid the current volatility and turmoil in the crypto ecosystem, blue-chip assets like BTC and ETH represent the most used assets for both reserve and DeFi investment purposes.

The PYTs based on the cxETH-WETH market is the very first outcome of this collaboration, whose journey will continue with the release of other brand new cxPYTs soon.

About CelsiusX

Launched in February 2022, CelsiusX issued wrapped assets for Cardano (cxADA), Ethereum (cxETH), Doge (cxDOGE), and Bitcoin (cxBTC).

The infrastructure created by Celsius empowers the crypto community and the institutional investors to wrap and bridge ADA, DOGE, ETH, and BTC from the Celsius ecosystem into Polygon.

Celsius integrated Chainlink Proof of Reserve (PoR), a pioneering approach to help audit and secure the on-chain minting, redeeming, and burning of wrapped cross-chain tokens.

Chainlink PoR enables the real-time auditing of Celsius’ wrapped tokens and of its Enzyme vault reserves, guaranteeing the proper collateralization of any minted token.

To learn more about how to send & receive assets using the CelsiusX Bridge, check this guide.

About Idle DAO

Idle DAO is a decentralized organization that builds yield automation infrastructure for DeFi. From brand new DeFi protocols to institutional and DAO treasury managers, businesses of every size use our protocol to optimize capital efficiency and manage their treasuries with DeFi.

We believe that everyone deserves the best for their idle funds, both in terms of returns and risks. Over the past three years, Idle has rolled out the features and services, defining and shaping the yield automation space.

To learn more about our products and services:

Get in touch: Website | Twitter | Discord | Telegram

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