How to Partake in Liquidity Provisions for USD+ on Polygon

May 20, 2022

USD+ is a USDC pegged stablecoin that yields daily profit to its holders just for holding it. It works by taking all the leg work out for the holder and automatically reinvesting itself into other reward-yielding stablecoin strategies. This generates holders of USD+ 6–12% APY — these rewards are paid out daily via rebases.

The yield for USD+ comes from the collateral, and it is deployed across a set of yield-generating strategies, including collateralized lending, e.g. AAVE and stable-to-stable liquidity pools. The logic is to choose immediate liquid assets (convertible into USDC on demand), minimum risk, and then optimize for returns.

Why Provide Liquidity for USD+

‘Liquidity Provisions’ is an immensely popular concept in DeFi. In return for using their tokens to provide liquidity, users earn transaction fees and gauge pool rewards (if offered). However, this model is further improved via USD+ as on top of usual rewards, users can earn yields from USD+ as well. To sum it up, providing liquidity for USD+ would earn you the following:

Yields from USD+
Transactions fees
Gauge Pool rewards (if any)

This massively increases capital efficiency within liquidity pools and allows yield-farmers to earn more yields (i.e, additional yields from USD+) than they usually would with other stablecoins (e.g, USDC, MAI, etc). This article guides you on how to partake in Liquidity Provisions for USD+.

Getting into the midst of it

To add liquidity for USD+, you must have the two tokens that you intend to provide liquidity for in equal proportions. For example, to LP for $100 worth on the USDC/USD+ pair, you’d need $50 in USD+ & USDC each, respectively. Choose the pair depending on your desirability while taking into account risk & rewards (you may incur Impermanent Losses). However, since USD+ is pegged to USDC via its collateralization, there would be minimal IL.

USD+ can be minted conveniently to avoid slippage on Overnight while USDC can be purchased from any Exchange on Polygon at minimal slippage (Quickswap, Dystopia, Balancer, etc). Refer to the following articles on how to obtain USD+:

Providing Liquidity on Dystopia

Once you have the two tokens in equal proportions, head on over to Dystopia’s liquidity page and enter your desired amount that you’d like to LP for. Keep in mind that there are a number of USD+ pairs.

The following is an example of the interface that would show up, and explains their functions.

Key points:

At the time of depositing into the pair, the pool was unbalanced. However, arbitrages would restore the balance to comprise the ratio of 1 USDC = 1 USD+. Doing so would consequently have your USD+ balance in the LP equalling USDC. No need to panic though, this is normal. For more information on how liquidity pools for USD+ operate, refer to this article.
Only the stable pool is incentivized (avoid the volatile pool).
We’d recommend using the default slippage of 2%.
We’d recommend using “Deposit & Stake” as it would deposit your LP tokens directly into the gauge pool to earn DYST tokens if/when they are emitted for the pair.

After clicking on “Deposit & Stake,” you’ll be asked to complete a set of approvals which can be seen below — make sure to approve all of them to successfully stake in the gauge pool.

That’s it, you’ve successfully deposited your LP tokens in the gauge pool!

Providing Liquidity on Quickswap

The process of providing liquidity on Quickswap is fairly similar to that of Dystopia and you’ll also need tokens in equal proportions here. As of currently, there are only 2 Liquidity Pairs for USD+ on Quickswap: wETH/USD+ & wMATIC/USD+. While none of them are currently incentivized via reward tokens, our upcoming Rewards Program would change that and allow our users to earn pre-OVN (our governance token) at generous APYs.

Moreover, keep in mind that USD+ is not yet whitelisted on Quickswap which means that you’ll have to import it manually. Head on over to Quickswap’s Liquidity Page and paste USD+’s contract address as in the case below.

The contract address is: 0x236eeC6359fb44CCe8f97E99387aa7F8cd5cdE1f

After doing so, choose your desired pair (either wMATIC/USD+ or wETH/USD+). You’ll then be prompted to approve your tokens on the router for spending after which you can successfully add Liquidity.