ADA Finance DeFi 101: Liquidity Provisions and Farming Contracts
In the previous ADA Finance DeFi 101 articles, we covered the referral program and address milestones, leading to our follow-up article on the staking and DAO programs.
In the previous ADA Finance DeFi 101 articles, we covered the referral program and address milestones, leading to our follow-up article on the staking and DAO programs.
In this article, we will elaborate on the ecosystem's liquidity provisions and farming contracts. We’re excited to explain in further detail how these features work and how together, create a revolutionary DeFi ecosystem
Liquidity in the ADAFi Ecosystem
Liquidity is the lifeblood of any financial market. Without liquidity, traders and investors would be unable to buy or sell their assets quickly, which would cause prices to spike as a result of a lack of supply and demand.
As a user, within the ADA Finance ecosystem, you can generate passive revenue by providing liquidity to our decentralized exchange, ADAFi Swap. This is called liquidity mining, or yield farming.
ADAFi Swap Liquidity Provider
When someone swaps a token using ADAFi Swap, they are charged a 0.3% swap fee. The swap fee is allocated to the liquidity pool’s liquidity providers, based on their share of the liquidity pool. A liquidity pool contains 2 assets and to provide liquidity to a liquidity pool, the user deposits an equal valuation of both assets.
For example, if you provided 10% of the liquidity pool, then you receive 10% of the swap fees of that liquidity pair. This is a win-win situation. The token swapper wins because he can swap quickly and efficiently because of your liquidity. In return, you win because you receive a portion of the swap fee. The more swaps that occur on ADAFi Swap that utilize the liquidity pool you contributed to, and the more liquidity you provide, the greater amount of crypto you earn in return!
Farming Smartcontracts (LP Staking)
For each trading pair on ADAFi Swap (e.g. USDT/ADAFI), ADA Finance establishes a liquidity pool. To incentivize liquidity providers to perform yield farming, the ADAFi ecosystem will set up Farming smartcontracts.
A Farming smartcontract has a monthly, fixed, reward for a dedicated liquidity pool. Therefore, liquidity farmers can see Farming smartcontracts as a bonus. Not only does the liquidity provider receive his share of the trading fees, but also his share of the monthly (fixed) rewards as long as he stakes his Liquidity Points.
How To Enter Farming Smartcontracts
When you provide liquidity to a liquidity pool, you receive Liquidity Points (LPs). You can deposit your Liquidity Points to the Farming smartcontract in order to not only receive your share of the liquidity pair trading fees, but also receive a share of the fixed rewards allocated to that liquidity pool, hence a Farming smartcontract.
Referral Program and Address Milestones
The Referral Program and Address Milestones are a centerpiece within the ADAFi Ecosystem. Our ADAFi DeFi 101 blog series started with a write-up about this topic, as with every passive earning opportunity within the ADAFi Ecosystem, there is an address milestone and a commission that goes to the referrer aka affiliate, with 3 levels. The commissions to referrers on address milestones are:
10% Tier 1
5% Tier 2
3% Tier 3
With farming, there is no difference. Users that engage with a minimum 5000$ value in Farming smartcontracts (quarterly), reach address milestones. Each time you reach an address milestone, it provides a 1-time bonus. The bonus is progressive (growing) as you work yourself to the top level.
If you were referred, your referrer receives a commission when you reach your milestones and if you have your Referral Program activated yourself, you receive a 10% kickback of that commission!
Vote For Farming Smartcontracts
The ADAFi DAO Program allows the Minister, and Ambassador, titleholders to vote every quarter which liquidity pool, on ADAFi Swap, will get a Farming smartcontract. With that in mind, to become a DAO titleholder, users need to stake (up to 20% APR) the minimum amount of tokens for 6 months in order to claim their DAO title.
The DAO Program gives voting rights, such as smartcontract audits, Farming smartcontracts, and projects on the ADAFi Launchpad, to the DAO title holders, as well as providing passive earnings through the redistribution of the platform fees!
ADAFi Launchpad — Liquidity Guaranteed
Newly listed projects, on a swap protocol, often depend on the community providing the liquidity, without any incentive. Therefore, many liquidity pools on swap protocols contain a very low amount of liquidity and can be a trap for the people that provide liquidity with the impermanent loss.
Projects that launch through the ADAFi Launchpad have 20% of the raised funds locked in a liquidity pool for 12 months. Additionally, the project will be required to provide Farming smartcontract rewards, to incentivize the community to provide liquidity to the token’s liquidity pools.
ADA Finance
As you can see, by providing your liquidity to the ADA Finance liquidity pools, your opportunities to earn passive income will increase as more users swap tokens on ADAFi Swap. Farming smartcontracts are an extra incentive for the liquidity providers to pick the ADAFi Ecosystem, completely on-chain to keep all of this activity automated, safe, and secure — the very definition of a trustless process within DeFi.
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