Announcing Liquid Staking Boost
Liquid staking boost is a new product offered by Numoen that allows traders to boost their yield by speculating on the staking rewards.
At its core, Numoen is an application that allows anyone to get leveraged exposure on ANY token. It does this by using an open-source protocol called PMMP.
The protocol is a two sided AMM where there are lenders and borrowers. A liquidity provider will lend out a LP share and earn funding from the borrower who is using the LP share to get constant leverage with no liquidations on ANY token.
After getting a considerable amount of user feedback, it has become evident that users care about two things. Either to earn some sort of “risk minimized” yield or to amplify it with leverage.
The most popular products in crypto are liquid staking derivatives like stETH and stMATIC. Lido, the most dominant staking platform, has around ~$10B in ETH staked (source: defillama).
For those comfortable holding the underlying token, liquid staking derivatives promise a low-risk source of yield. This yield is a variable rate which is oftentimes made up of MEV rewards and token incentives as well.
How does squared leverage work on liquid staking tokens?
Liquid staking tokens are special because they are yield bearing assets whose returns are always expected to be greater than 0 with respect to the underlying token. As such, lending markets have grown in prominence by offering leverage on these staking yields.
With Numoen users can go long without having to worry about liquidations or margin as the leverage on their position stays constant.
Liquidity providing, where the LP position is lent out is also great for boosting yields and less risky than taking on leverage. On top of earning funding, LP also take on minimal losses in the case of a depegging event as the portfolio holds a sufficient amount of the underlying token.
Example
Initially, let’s assume that the liquid staking derivative and its underlying are trading at a price of 1 with a 5% staking rate.
After a year, a long position will return 5.25% and an LP position will return -3.75% relative to just holding the liquid staking tokens themselves. This example shows that as long as the borrow rate is below 5.25% and the supply rate is greater than 3.75% both positions are profitable.
PMMP is a protocol for the automated liquidity provisioning of Power Tokens directly on the blockchain. The protocol has no governable parameters, no special privileges, and is non-custodial. Please understand that while the code has been audited it does not guarantee the safety of your funds. In fact, interacting with the protocol can come with substantial risks. Be aware of these risks before interacting with PMMP. A governance token should never be expected.
Learn more
Discord: https://discord.gg/6Dtc49Dt4W
Twitter: twitter.com/numoen
Website : numoen.com
