This past week we shared insight into Synthetix’s most recent upgrade – Achernar.
Complete with a multitude of benefits including the introduction of ETH as collateral, the sector leading derivatives exchange is gearing up for what should be it’s the biggest year to date.
For those unfamiliar, Synthetix was one of the first projects to incentivize Uniswap liquidity. In short, users who contributed liquidity to the sETH Uniswap pool receive rewards in the form of SNX through inflation.
While this sounded great from a high level, the process was originally manual – meaning users would need to submit requests for compensation on a case by case basis.
In this article, we’ll be walking through the new automated reward system, along with how you can get involved.
sETH Liquidity
The first Synethetix-based asset to enjoy automated staking rewards is sETH – Synethetix’s version of Ether. Seeing as sETH is pegged to 1:1, the pool is a perfect liquidity medium as there is no impermanent loss from one asset appreciating in price relative to the other. As stated in the official blog post:
“sETH liquidity providers in Uniswap will be required to stake their LP tokens to claim their SNX rewards”
Let’s walk through how to acquire Uniswap LP tokens and stake them through Mintr in a couple easy steps.
Using DeFiZap
While you can always buy sETH directly on Uniswap, we suggest using Zapper’s “sETH Unipool” Zap to save on time and the number of transactions.
To get started, simply Zap In to the sETH Unipool Zap. Please note that in order to claim staking rewards, you must have AT LEAST 1 full sETH LP token, meaning that you will need to supply a minimum of 1 ETH and 1 sETH.
In the case of sETH Unipool Zap, this means you should be prepared to deposit a minimum to 2 ETH as to ensure you receive 1 full sETH LP token in return. Users can view how many sETH LP tokens they will receive under the “Estimated Output” line.
Select your preferred transaction speed and click “Zap In”. This will prompt the select of your preferred web3 wallet (either MetaMask or Fortmatic at the time of writing) along with a prompt to confirm the transaction.
Upon a successful transaction, we can now head over to Mintr to quickly stake our newly received sETH LP token. Once on Mintr, users will need to connect the wallet which received the sETH LP tokens (the same one used on DeFiZap).
Next, head over to the Unipool tab on the far right. You’ll notice that your newly created sETH LP tokens are listed under the “Balance: X UNI-V1” section. Simply select “Stake All” to have your LP tokens deposited in the staking contact.
A transaction request will open in your web3 wallet, immediately displaying an etherscan link at the bottom of the Unipool tab.
Once completed, sit back and relax! Your sETH is not only collecting fees on Uniswap, it’s now earning weekly SNX inflation!
Rewards are aggregated automatically, meaning all users need to do is click “Get Rewards” when they wish to claim their underlying SNX balance. Similarly, if at any point a user wishes to exit the staking pool, simply “Withdraw” the amount of sETH LP tokens being staked.
What to Expect
In the coming weeks, we expect Synthetix to incorporate incentives to seed sUSD and possibly SNX Uniswap pools as well.
If one thing is for certain, the Unipool beta is a promising step in the right direction for general protocol liquidity incentives.
We anticipate many other DeFi projects will likely follow suit, potentially even rewarding users in exogeneous assets like ETH for providing liquidity on DEXs like Uniswap.
Please note that rewards are issued weekly, meaning that upon depositing into the staking contract, users will have to wait a minimum of 7 days to see any rewards worth claiming.
Seeing as this feature is relatively new, we’ll be sure to update everyone on the returns (measured in SNX/week) for every 1 LP token provided to the contract.
As the program continues to heat up, we recommend testing out the feature sooner vs later to enjoy one of the best passive income opportunities on ETH.
In the meantime, be sure to stay up on all things Synethetix via their official Twitter.
Cooper is the Editor of DeFi Rate and an active contributor to leading DeFi media outlets like The Defiant, DeFi Pulse, and Bankless. He works with early-stage teams through Fire Eyes DAO to incubate governance models and grassroots community development. He is an ambassador to Set Protocol and an author of a weekly publication called Token Tuesdays. To stay up with Cooper, follow him on Twitter.