With the launch of our Degenbox, Abracadabra can now enhance the yield on interest-bearing collaterals! Let’s see how this applies to the Stargate Cauldrons, no matter what chain they are on!
The Strategy
Let’s dive into our Degenbox Strategy on Stargate Cauldrons, how it works and how our users can benefit from it! This article will be explaining how the process works for every single Stargate LP market. An example of these markets can be found here.
Before starting, make sure to read how Abracadabra Lending Markets and Leveraged Positions work here.
Step 1: The Cauldron
Users join the Stargate market either simply depositing collaterals or leveraging their Stargate LP tokens positions! No matter what they choose, as long as they have a Stargate LP balance deposited (USDC or USDT for example), they will receive rewards from the strategy!
Step 2: Degenbox
As the Stargate Cauldrons are built on top of Degenbox, Abracadabra can use the user’s deposited LP to produce yield. For this strategy, we are staking Stargate LPs on Stargate Finance for STG tokens.
Step 3: Distributing Rewards
Once a harvest is triggered, farmed STG are harvested and then redistributed to every Abracadabra user of the cauldron, proportionally to their deposited amount!
Note that a 50% cut is currently taken as a management fee, and is going to the protocol treasury!
This management fee is variable, but it is already accounted for in the APY displayed by our UI.
And just like this, our Stargate strategy is now live!
The best thing about it is that there is no need to migrate your collateral. If you have a position already open in that market, you are already earning STG rewards!
Note that from now on, users will see their Stargate LP collateral increase in quantity, not only in value!
Withdrawing Stargate LP tokens
Our strategies keep approximately 95% of the Stargate LP tokens staked in Stargate Finance farming contracts, and 5% in Degenbox to allow users to withdraw smoothly! As a consequence, the amount withdrawable is limited. The APY displayed by the UI takes this into account as well.
Once this limit approaches zero, new Stargate LP tokens are unstaked and withdrawals are again available*! Note that given the way Stargate works, sometimes there are not enough tokens withdrawable on the cauldron chain, hence users might need to wait for Stargate Bridge to bring some funds on the cauldron chain before closing the entire position!*
You can check the amount Available to be withdrawn in the “My Open Position” box, under “Withdrawable Amount”.
