In this article, we will provide a step-by-step explanation of how to deposit on UwU Lend and include a detailed look at the potential rewards for doing so.
Deposits
As explained in our last article, depositing your assets makes them available for other users to borrow them. In return, you receive part of the interest the borrowers are paying. The rest of the interest paid is distributed to the users staking the LP tokens, supporting the rewards flywheel. Your potential interest over the course of a year is displayed on the deposit section as APY (Annual Percentage Yield).
Based on the screenshot above, you would receive 6.47% on deposited USDT. So, your deposit of 100 USDT would grow to 106.47 uUSDT over the course of a year as uTokens accumulate rewards automatically. You can then simply withdraw to receive 106.47 USDT. As soon as you deposit, you can immediately see your rewards begin to accumulate! You can also withdraw your deposited amount in partial or in full at any time, because there is no lock on deposits.
The interest rates are variable and change based on pool utilization (the amount of assets borrowed vs. available). The more assets that are borrowed, the higher the interest they pay and the higher the APY for depositors. The APY shown on the website indicates the average yield (or return) over the previous 30 day period generalized to a yearly estimated return.
Additionally, you would receive 2.35% APR (Annual Percentage Rate) in UwU tokens. These accumulate under the rewards section and need to be claimed manually, unlike the automatically received APY.
How To Deposit
1. Connect your wallet to https://app.uwulend.fi.
2. Choose the asset you want to deposit on the “Markets” page or go to “Deposit” to easily view the available options. Enter the amount you wish to deposit.
3. Approve the amount you wish to deposit.
4. Once approved, or if you have previously approved, the button will say “deposit”.
5. Enter the amount you wish to deposit or use the “max” button and click “deposit”.
Done! You can now view your deposit under the “Dashboard” tab after refreshing and see rewards accumulating over time.
Important to Note
- Approvals are, simply put, giving the smart contracts permission to access the approved asset. You can either approve an infinite amount or the exact amount you wish to use. Depending on how often you use a platform and how trustworthy it is, infinite approvals can be risky should the platform fall victim to an exploit, so be mindful if you choose that option.
- On the other hand, it is more efficient for often used and trusted dApps to approve an infinite amount or more than needed, as you will otherwise need to approve every time for the exact amount you wish to use, which can lead to increased gas costs.
- APR and APY are both annual percentages of return. APY includes auto compounding of rewards, while APR does not.
- Be mindful when securing your wallet. If you lose access to it nobody can recover your funds. Deposited funds cannot be accessed by the team or developers so keep your wallet keys (seed phrase) and passwords safe.
- If you send your uTokens to another wallet, this wallet will have a balance under the “Dashboard” tab automatically and the sender wallet will not, as the smart contracts automatically read the wallet balance of uTokens when connecting to the platform.
Vesting of Rewards
It is important to note that UwU rewards from deposits and borrowing need to be vested.
This requires two actions from the user. When you have accumulated enough UwU rewards and wish to withdraw them to either sell or LP stake them, you need to start the vesting process. This is done by clicking the “Start vesting” button under the rewards section that can be found on the “Stake” page as well as on the “Dashboard”.
Rewards need to vest for four weekly blocks beginning Thursday 00:00 UTC. This means that if you start vesting on Wednesday, you will have completed one block by the next day and will be able to claim after three more blocks.
Timing your vesting and doing it close to the cutoff time on Wednesdays is therefore favorable compared to frequent claiming. As usual, be mindful of gas price (gwei) when doing transactions.
Once you begin the vesting process, you can claim and exit early at any time. To exit early, click on the “Exit Early” button under the rewards section “Current Vesting”. This will transfer 50% of the claimable UwU tokens to your wallet and the other 50% are added to the revenue stream that is distributed to LP stakers.
You can manage your current vesting rewards, check the vesting end dates, exit early or withdraw fully vested UwU on the rewards section on the “Stake” page.
Emissions
Emissions are tokens distributed by the protocol that do not come from revenue, but rather they are the protocol’s own token. This token usually represents an important part of the protocol, being used to enable specific utilities.
On UwU Lend, UwU tokens are used to give additional incentive to lenders and borrowers and incentivize users to participate in the LP by offering revenue share via the LP staking. UwU was added as a pure revenue share token with a limited max supply of 16 million. This means no more than 16mm tokens will ever exist. The treasury also burns tokens received via LP staking.
Part Four
In our next article, we will explore borrowing and interest, as well as liquidations and how to monitor your positions to stay safe.
