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Solace.Fi

How to Win in GYSR’s $SOLACE/FRAX Competitive Pool

Solace’s latest partnership with Gelato and GYSR created a liquidity mining incentive that already rewarded over 360,000 $SOLACE tokens in its first week on GYSR!

There’s still 5.64 million more $SOLACE remaining in the incentive, so in this article, we’ll explain how you can take advantage of the latest incentive with GYSR’s competitive pool system.

What is a Competitive Pool?

Let’s review how liquidity pools work on traditional decentralized exchanges (DEX). Liquidity providers get a return on fees plus any extra token emissions during any liquidity mining promotional incentive.

GYSR does it different. Liquidity Providing becomes a competition between who can provide the most liquidity, and who can unstake and restake their tokens with the highest multipliers. As a user holds their stake, they can accrue share seconds, which can also give users a multiplier (not for this pool, though). You can get into the details of their rewards system here.

You got four decision vectors to consider with the GYSR SOLACE/FRAX pool:

  1. Your portion of the staked LP
  2. Your current accumulated rewards
  3. Your potential multiplier when spending GYSR tokens
  4. The amount of GYSR tokens already spent for the pool multipliers

Your portion of the staked LP (1) is directly going to affect your current accumulated rewards (2).

Similarly, the amount of GYSR tokens already spent multipliers (3) will directly affect your multiplier when spending GYSR (4). GYSR becomes less and less effective on the multiplier with each GYSR spent. However, if users decrease their GYSR spend, then the multiplier power can go back up.

Here’s the kicker: when GYSR is spent to create a multiplier, the extra tokens coming from the multiplier are siphoned from other users’ claimable rewards… I told you, it’s competitive!

With these four decision vectors in mind, you have a few strategies to make the most of the competitive system:

Strategy #1: Claim rewards multiple times a day without burning GYSR

Strategy #2: Claim rewards multiple times a day and burn GYSR

Strategy #3: Claim rewards once a day or longer without burning GYSR

Strategy #4: Claim rewards once a day or longer and burn GYSR

In strategy #1, stakers claim rewards multiple times a day with the goals of claiming tokens as often as possible, minimizing gas usage (yay, go Polygon!) and never spending GYSR. From a game theory perspective, this is a great move if you don’t have $GYSR tokens.

In strategy #2, stakers claim rewards multiple times a day an burn GYSR. The goal of the staker is to claim tokens as often as possible and spending GYSR to increase the multiplier each time. The challenge is spending GYSR for an effective multiplier for each claim. Having 50 GYSR each time vs. having 150 GYSR will make for higher multipliers, but it might not be worth spending all that GYSR for small claims.

In strategy #3, stakers claim rewards once a day or longer without burning GYSR. the goal of the staker is to hope that they do not lose too many rewards from other claimers that use multipliers to take from the staker’s claimable rewards. From a game theory perspective, this is the worst position to be in because the user is experiencing losses from other users’ claims multipliers and not taking advantage of GYSR multipliers themselves.

In strategy #4, stakers claim rewards once a day or longer and burn GYSR to increase the multiplier. The goal of the staker is to leverage the GYSR multiplier to account for losses from competitor LPs. Because the size of claimable rewards is more, spending more $GYSR per claim has a stronger ROI.

You can see multiple examples of these different strategies at play from this screenshot of the SOLACE — FRAX pool stats:

SOLACE — FRAX Pool claims over 3/14/2022

In general, it’s better to claim rewards when no one else has claimed in a while, but that can become challenging to time. Let’s work to understand the strategies a bit better. Consider the matrix below:

Decision Options available for each player

For claiming tokens, you can choose to claim multiple times a day (i.e. 1) or claiming every day or fewer (0). Burning GYSR to increase the multiplier can happen three ways: dont’ burn (0), burn under $10 of GYSR (1), or burn more than $10 GYSR (3).

In the matrix, the best solution is (1,1): to claim a lot in a day, and burn $10 or less GYSR per claim. The second best solution, (0, 2), would be just as good if it were not for the fact that $GYSR becomes less effective per each token spent on a multiplier. The (0, 2) method’s success is dependent on how much GYSR has been spent up to that point because the more GYSR spent, the less effective the multiplier, and vice versa.

Now that we know the variables to pay attention to, and the game theory of each strategy, let’s show you how to provide liquidity for the SOLACE — FRAX pool.

How to Provide Liquidity with Gelato

  1. Buy some $SOLACE and $FRAX on Polygon. You can do this via this Uniswap pool. If you need to bridge tokens to Polygon from Ethereum, use the Polygon Bridge.
  2. Go to the SOLACE — FRAX G-UNI pool link. Add your liquidity.

3. Once you add liquidity and obtain your G-UNI tokens, go to the SOLACE — FRAX GYSR pool. Stake your G-UNI tokens and begin the game (theory) of liquidity mining your $SOLACE!

From here, you can decide to claim often, claim seldom, burn a little of GYSR, burn a lot of GYSR, or don’t burn at all. The choice is ultimately yours. Good luck and we wish you all the best in the liquidity mining games!

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0xnimz

0xnimz

Head of Growth @ Solace | USC Grad Student | writing ✍️ | musician 🎸