How to Get Extra Yield from Sikka Stable Assets
With the evolution of DeFi, one of the primary reasons for the explosive interest in Yield Farming is the passive income opportunities. The volatility and unpredictability of the crypto market drove investors to search for ways to make extra income without overly exposing their capital to the volatile market. Yield Farming became the answer.
Yield farming: The solution to DeFi’s liquidity problems
Getting a loan can be a daunting task for many people, especially since there are a lot of administrative and red tape steps involved. In contrast, with DeFi, people can get loans without having to go through the bank. To address this issue, many platforms are recruiting long-term investors known as HODLers. These individuals are incentivized to add to their pools of liquidity.
As more people borrow from other users, it could compete with venture capital and debt investors in the future.
What is the connection between yield farming and liquidity pools?
Liquidity providers are charged fees by platforms such as Balancer and Uniswap. These fees are used to incentivize investors to increase their pools of liquidity.
The fee that a platform charges for each transaction is distributed to its liquidity providers, who are the individuals who provide the liquidity. Since the demand for DEX trading has increased, the profits that these providers have received have been very positive. This liquidity pool is a way for them to earn rewards and increase their liquidity.
How Sikka Goes Beyond Liquidity Mining
From the perspective of protocols looking to bootstrap usage, at first liquidity mining seemed like the future of how projects would find product-market fit. Sikka harnesses liquidity to make payoffs more transparent. It achieves this via a dual token mechanism where SIKKA is a stable asset and GIKKA (the governance token of SIKKA Protocol) is used to govern SIKKA’s Revenue Pool distribution and to incentivize users.
Users can stake, swap, buy, sell and put the SIKKA Stable Asset and GIKKA into farming pools on external DEXs. These DEXs will determine the terms of participation in liquidity pools as well as the amount of the rewards for liquidity providers and the trading fees for contributing. The liquidity pools will be incentivized with SIKKA or GIKKA tokens as farming rewards.
This inclusion of SIKKA and GIKKA tokens into external DEXs will contribute to improving the overall trading experience of SIKKA’s native cryptocurrencies with seamless swaps, dramatically reduced trading fees, and more advanced trading mechanisms.
Larger liquidity pools generally carry less slippage and produce a better trading experience. Thus SIKKA and GIKKA liquidity providers will be rewarded with extra tokens for supplying liquidity to certain pools on external DEXs.
Yield farmers can supply SIKKA or GIKKA to one of the liquidity pools in protocols like Uniswap, Dystopia or Balancer and get rewarded with fees that are charged for swapping different tokens. Lliquidity mining can supercharge this by supplying coins to certain liquidity pools where farmers are rewarded with extra tokens.
Liquid Staking tokens are automatically issued when users successfully stake assets such as SIKKA or GIKKA tokens.
For example,
1. Sikka Liquid Staking tokens — hSikka and MATIC pairs can be used to provide liquidity to hSikka/MATIC liquidity pools on DEXs. As more people trade, users can earn a share of transaction fees (Liquidity Mining), on top of their Sikka staking rewards from hSikka.
2. By providing liquidity, they also have the possibility of receiving farming rewards on top of Liquidity Pool tokens, representing their share of a liquidity pool on a DEX.
3. Users can harvest the farmed tokens and stake those tokens as well to earn more yield, or simply sell them to buy more SIKKA and GIKKA to generate more yield. Repeating this operation periodically will add a compounding effect on their yield.
Sikka Money will continue to increase protocol adoption by partnering with DeFi protocols on MATIC and using the native token of various DeFi protocols to influence rewards emission. The team will actively incentivize with SIKKA tokens, Sikka liquidity pools across decentralized exchanges to maintain the price stability of the SIKKA Stable Asset.
DeFi composability would enable Sikka liquidity providers, and at a later stage, SIKKA stakers as well, to further boost yield sustainably thanks to integration in other lending platforms.
Is Sikka worth it?
Sikka is designed to bring many new people to the world of DeFi, enabling many to make from their idle crypto assets as they HODL.
And this is just the first step. Sikka will continue to increase protocol adoption by partnering with DeFi protocols on MATIC and using the native token of various DeFi protocols to influence rewards emission. The team will actively incentivize with SIKKA tokens, liquidity pools across decentralized exchanges to maintain the price stability of the SIKKA Stable Asset.
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Disclaimer: Although we reference “stablecoins,” we don’t claim that these assets will always hold their peg. We call SIKKA a stable asset, reflecting that it’s over-collateralization price stability has a few days lag time.
