Mechanism and Use Cases of sAVAX
sAVAX is an AVAX staking provided by BENQI. The biggest liquid staking and lending system on Avalanche. Mechanism and Use Cases of sAVAX.
sAVAX is similar to stETH and ETH. Users may stake native tokens (e.g. AVAX, ETH) to secure POS networks (e.g. Avalanche, ETH2.0) and obtain staking incentives from the network. With the rise of decentralized liquid staking protocols, users now have the option to stake tokens through them to the network for additional benefits, including receiving staked assets (such as sAVAX, stETH) for increased flexibility and extra yields and having no restrictions on the number of tokens or hardware.
Value of sAVAX
sAVAX is transferable and, different than stETH, accrues the staking rewards automatically: claimable AVAX per sAVAX = (total AVAX staked + total staking rewards generated) / total sAVAX minted. Therefore, the amount of AVAX that could be unstaked from each sAVAX keeps growing continuously, regardless of where users’ sAVAX tokens were acquired, via BENQI through staking, via Trader Joe through swapping, or just via another address through simple transfer.
Flexibility brought by sAVAX
A normal AVAX stakers sacrifice their exit opportunities due to the immobility of staked AVAXs. When staking through BENQI, sAVAX holders regain their exit flexibility through trading sAVAX at his/her own discretion. Right now, protocols like Trader Joe and Platypus provide sAVAX trading pools with decent liquidity.
Earning extra yield with sAVAX:
sAVAX is being integrated by an expanding number of protocols as collateral & liquidity assets for a rising variety of application situations, which gives sAVAX holders flexible yield potential. Users that invest AVAX via BENQI get 2 forms of reward, adding up to nearly 20% APR:
- AVAX staking rewards from Avalanche network (~7.2% at time of writing);
- Earnings from single sAVAX yield strategies (from 2% to 18% depending on the strategy);
- Earning from sAVAX-StableCoins yield strategies (from 12% to 60% depending on the strategy) *risk of impermanent loss*
sAVAX Yield Strategies: Expectation
The sAVAX ecosystem will likely reproduce and grow, which will result in an increase in sAVAX use cases and sAVAX yield tactics. However, more complexity results from greater variety.
Without significant blockchain coding skills or robust blockchain tools, certain high yield tactics could not be readily available to consumers. CIAN, a decentralized automation tools platform that just joined Avalanche, significantly lessens this issue. A rising number of automation primitives are available on CIAN to lower operational complexity, lower capital risks, and boost capital efficiency for users. For sAVAX, CIAN has partnered with BENQI to develop a set of automated yield techniques that, with the use of decentralized automation primitives from CIAN, significantly minimize users’ work without incurring any extra costs. The article’s conclusion contains further information regarding CIAN.
Mechanism and Use Cases of sAVAX
Decentralized Exchanges
Trader Joe is a prominent DEX on Avalanche. sAVAX’s holders can provide liquidity in the sAVAX-AVAX pool on Trader Joe to earn some swap fees and token rewards. Impermanent loss is ignorable owing to the price synchronization of this particular token pair.
Other sAVAX liquidity pools can be found in Platypus and Pangolin.
Lending
Lending protocols allow users to deposit sAVAX tokens as collateral to borrow other crypto assets. This gives users access to new yield strategies, while conserving their staking rewards. Users can borrow various assets using sAVAX as collateral on BENQI, and then utilize these assets to farm extra yields on other protocols.
Currently, BENQI, Yeti Finance and MoreMoney support sAVAX as collateral. More lending platforms are expected to join the movement in the near future with the expansion of sAVAX ecosystem.
About BENQI
Built on Avalanche’s highly scalable network, BENQI’s vision of bridging decentralized finance (DeFi) and institutional networks starts by launching BENQI on the Avalanche C-Chain. BENQI’s suite of yield-generating DeFi products consists of BENQI Liquidity Markets and BENQI Liquid Staking.
About CIAN
CIAN is developing a collection of automated primitives via extensive integration of blockchains/protocols and sophisticated automation that reduce difficult manual executions of common onchain tasks/strategies to a straightforward, three-step job description procedure for no-code users. The goal of CIAN is to reduce operational complexity by 80% while increasing capital efficiency by up to 60%.
SOURCE
https://cian-app.medium.com/mechanism-and-use-cases-of-savax-aca8df179b41
