Earn yield on passive Holdr LP liquidity through Bastion
TLDR
Holdr.Fi is a friendly fork of Balancer on Aurora. Their new Boosted Pools feature makes passive LP tokens productive by storing the majority of liquidity as yield-bearing tokens on Bastion, allowing liquidity providers to earn yield while contributing to the liquidity pool.
This provides users with improved capital efficiency and yield opportunities while benefiting the entire Aurora ecosystem.
Traditional liquidity pools are inefficient due to the presence of idle liquidity that doesn’t generate any yield or fees. In fact, according to industry data, swaps typically won’t use more than ~20% of the balances in the pool since trades of that scale would significantly change the price.
This idle liquidity decreases LPs’ profits, motivating them to move their liquidity into other protocols and tools that offer better utilization and yield. This creates a problem for the entire ecosystem as it leads to a decrease in liquidity, making it harder for traders to find fair prices and reducing overall returns for LPs.
One way to think about the problem of idle liquidity is from the perspective of alternative cost. When liquidity is idle, it represents a lost opportunity cost for liquidity providers. They could be earning a return on that capital elsewhere, but instead, it sits idle in a liquidity pool. This creates a trade-off for liquidity providers between earning a return and providing liquidity.
This approach tackles the same problem that Bastion has aimed to solve for with our Stableswap cToken-stacked integration: idle LP liquidity.
What are Boosted Pools?
Launched by Balancer in 2021, Boosted Pools achieve high capital efficiency by storing the majority of their liquidity on external protocols as yield-bearing versions of common tokens. This results in more profits for liquidity providers since their liquidity is no longer idle, and they no longer have to choose between using their liquidity in a pool or in a lending protocol.
By eliminating this trade-off, Boosted Pools offer liquidity providers the best of both worlds:
- The ability to earn yield on their assets
- and the flexibility to provide liquidity to a pool that benefits the entire ecosystem.
This makes Boosted Pools a win-win for all participants, ultimately contributing to the growth and sustainability of the decentralized finance space.
Boosted Pools consist of two types of tokens: the common pool tokens and the yield-bearing pool tokens. The common pool tokens, such as USDT and USDC, are used to provide liquidity to the pool, while the yield-bearing pool tokens, such as yUSDT and yUSDC, are used to generate yield on the liquidity. These yield-bearing tokens are wrapped versions of the common pool tokens that can be used in external lending protocols to generate yield.
The Bastion-USDC-USDT pool has also been integrated with 1inch, enabling maximum trade efficiency.
How to join the pools
To join either pool, all you have to do is deposit your USDT or USDC on Holdr.Fi. The pools will then work their magic through arbitrage and balance your position.
If you already hold a USDT/USDC position on Bastion, you can directly deposit your cUSDT and cUSDC and earn additional trading fees from USDC/USDT trades as well.
About Bastion
Bastion is a Lending and Stableswap protocol built on Aurora, NEAR’s EVM-compatible layer. The project innovates with novel features such as: isolated markets, interest rate swaps, increased receipt token utility, and boosters. Building on Aurora enables Bastion to create an autonomous interest-rate engine with superior capital efficiency, low slippage swaps, fast transactions, ultra-low fees, precise liquidations, and harness the underlying UX benefits of NEAR.
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DISCLAIMER: This article does not constitute investment advice. Bastion Protocol Token (BSTN) is a means by which users may utilize and govern the protocol. Bastion does not recommend purchasing BSTN for speculative investment purposes. BSTN tokens may lose value or have no value and may have no market. Please read the full disclaimers here.
