How To: Liquidity mining with SushiSwap Onsen

in ETH 2.0, Lido by Lido

In this guide we walk you through how to add LDO-ETH liquidity using SushiSwap Onsen, whilst staking your SLP tokens for added rewards.

A new LDO-ETH liquidity pool has been added to the SushiSwap Onsen menu. Users that provide LDO-ETH liquidity into this pool will start receiving liquidity mining rewards - in the form of $SUSHI - whilst maintaining their exposure to LDO/ETH.

Onsen is a secondary product launched by SushiSwap in order to initiate liquidity mining incentives on their platform. These liquidity pools allow for future interoperability opportunities within the emerging DeFi ecosystem, whilst simultaneously improving market efficiency for the selected variety of endorsed tokens.

 

Summary

  • Provide liquidity in the Onsen LDO-ETH pool to earn fee rewards.
  • Stake your liquidity tokens to earn rewards in the form of SUSHI tokens.
  • Retain your exposure to LDO/ETH.
  • Unstake whenever you decide to.

 

How does Onsen work?

SushiSwap Onsen hosts various external protocols to their very own hot springs (liquidity pools) to actively encourage users of these external protocols to stake their native tokens as liquidity.

To participate in the Onsen pool, users must provide a 50/50 split of LDO and ETH/WETH.

In exchange for users providing their native tokens as liquidity (which in our case is LDO), Onsen rewards users who are supplying liquidity to their Onsen pools with continual rewards, embodied in their very own native token: SUSHI.

In doing so, Onsen liquidity pools remain liquid – allowing for efficient swaps with low slippage – and will facilitate itself as a large liquidity provider to users who want to swap in and out of their positions.

Please be aware of the risks involved, namely impermanent loss.

 

How to provide liquidity with SushiSwap Onsen

Users can provide pool liquidity on Uniswap to improve the LDO market efficiency and earn token rewards. Liquidity providers get a split of trading fees corresponding to their “pool share”.

  1. Head over to the LDO-ETH Onsen pool.
  2. Select the “+ Liquidity” button.
  3. Select the LDO and ETH/WETH token amounts you would like to add to the liquidity pool. Note you must provide 50/50 LDO and ETH.
  4. Confirm your choice by pressing Supply.
  5. A notification box will appear confirming the amount of LDO/ETH Pool Tokens you will receive. Press Confirm Supply when ready.
  6. Confirm using your Ethereum wallet.
  7. Once confirmed you will be supplying liquidity to the LDO/ETH pool, and you will see a corresponding LDO/ETH Pool Token balance in your wallet.

 

Providing LDO/ETH liquidity with SushiSwap Onsen

 

To remove liquidity, visit the LDO SushiSwap pair and choose ‘- Liquidity’ in the right-hand form. Choose the amount of liquidity to remove and press Remove when ready.

Please note that your tokens must be unstaked before you are able to remove them from the LDO/ETH liquidity pool.

 

How to stake your LDO/ETH Pool Tokens

Liquidity Providers can multiply their earnings and earn additional $SUSHI token rewards - up to 16% APY at the time of writing - by staking their LDO/ETH Pool Tokens which they received for adding pool liquidity.

  1. To get started, visit sushiswap.fi/farms/special and find the LDO pool.
  2. On the right hand side, press Approve Staking. Confirm the choice with your Ethereum wallet.
  3. Following a successful transaction, you will be able to stake your LDO-ETH SLP Tokens.
  4. On the right hand side again, press Stake.
  5. A pop-up box will now appear - enter the LDO-ETH SLP amount you want to stake and press Confirm. Confirm the transaction in your wallet.
  6. Upon confirmation of the transaction, you will now be staking your LDO-ETH SLP Tokens entitling you to a token fee share as well as $SUSHI tokens.
  7. Visit sushiswap.fi/farms/special to view/confirm your staked balance.
  8. To unstake, press Unstake and enter the amount of LDO-ETH SLP tokens to unstake. Confirm the transaction when ready.

 

 

Track your SushiSwap Rewards

To track your rewards, visit sushiswap.fi/portfolio. On this page you will be able to view the following:

  1. Your Total wallet balance
  2. Sushi Balance
  3. Liquidity Positions
  4. Farm Value

These components are described in more detail below.

 

 

1. Your Total Wallet Balance is the combined value of your Sushi Balance, Liquidity Position and Farm Value, including both your staked and unstaked tokens within SushiSwap.

2. Your Sushi Balance represents your total balance of SUSHI tokens, including those that are Harvestable, Locked (⅔), Unstaked and Staked.

  • Harvestable: Your share of earned SUSHI tokens (earned from staking) which are free to transfer/trade immediately. This represents ⅓ of your earned staking rewards.
  • Locked (⅔): The last ⅔ of your earned staking rewards are vested for 6 months. After 6 months these tokens become Harvestable and are thereby free to trade/transfer.
  • Unstaked: The share of your SUSHI tokens which are currently unstaked and not earning xSUSHI.
  • Staked: The share of your SUSHI tokens which are currently staked and earning xSUSHI. xSUSHI is a token similar to SLP tokens which you receive in exchange for staking your SUSHI.

3. Your Liquidity Positions displays the share of tokens which you are adding to the LDO-ETH/WETH Liquidity Pool, including your original balance as well as any earned fees. Your earned fees are a product of the pool trading volume, together with your share of the pool. Please note that if you are staking your LDO-ETH SLP Tokens (to earn additional SUSHI rewards), they will not be displayed in this section.

4. Your Farm Value displays the value of your staked LDO-ETH SLP Tokens, including your Rewards (SUSHI rewards from staking) and P/L (fees earned from providing pool liquidity).

 

How to attain LDO beforehand

Users can purchase LDO beforehand and afterwards supply it as liquidity to the Onsen pool. Current markets include 1Inch, Uniswap and more.

Alternatively, there is another liquidity mining event currently happening. Users can supply stETH as liquidity via Curve in order to earn LDO.

This opens up the possibility of an experimental strategy where liquidity providers can stake their stETH into Curve, farm LDO alongside CRV and trading fees, swap CRV into WETH, and then deposit LDO and WETH into the Onsen LDO-ETH liquidity pool to accrue SUSHI. Ultimately at the end, the strategy can also swap this SUSHI back into stETH to deposit back into Curve to accrue even more rewards.

This strategy allows for liquidity providers who do not mind taking on more risk to earn even more rewards.

This is a solid example of interoperability that is emerging in separate DeFi platforms within the greater DeFi ecosystem, a fundamental principle that Lido strongly maintains and intends to affirm with many other DeFi platforms and protocols.

 

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