Impermax now Supports Staked Liquidity as Collateral

Liquidity staking is a technique used to incentivize liquidity providing to one or more AMM’s trading pairs. Liquidity providers can stake their LP tokens on specific staking pools in order to receive an additional reward over the fees that they accrue from the AMM. A good percentage of the liquidity provided to AMMs today is incentivized through staking.

Impermax is a lending protocol that allows the use of LP tokens as collateral. The main limitation with Impermax was that in some cases users were forced to choose between either staking an LP token or using it on Impermax as collateral, and they couldn’t choose to do both at the same time. However this is not an issue anymore. Impermax now supports staked LP tokens and allows users to earn both the trading fees and the staking rewards while using it as collateral and leveraging it.

Liquidity Staking is Seamless to the User

Staking rewards reinvesting is enabled through a bounty program. Users will be able to call the reinvest function for reinvesting the staking reward of a certain pair and in exchange for that they can keep a percentage of the reward for themselves (the bounty).

Implications

For example Impermax is currently launching on many different networks and AMMs. QuickSwap will be supported on June 17th, and it will be followed by SushiSwap, PancakeSwap and others. These Automated Market Makers are giving staking rewards in their native token to strategic pairs and because of this liquidity providers can usually enjoy much higher ROI on these protocols when compared to Uniswap V2. Impermax will now enable liquidity providers to take full advantage of the situation and will allow them to leverage their LP tokens in order to multiply the reward.

Another use case is supporting the liquidity mining programs of some specific trading pairs. Several projects are using liquidity staking in order to attract liquidity to their trading pair and are offering very high APYs to liquidity providers. These projects will now be able to add their pair on Impermax with staking enabled. Impermax’s users will be able to take advantage of the very high APYs and in exchange more liquidity will be added to the trading pair with optimal capital efficiency.

Technical Implementation: Staked LP Tokens

In order to enable staking on Impermax without changing the core smart contracts we introduced the concept of Staked LP Tokens: an ERC20 contract that wraps an LP token and stakes it. All implementation smart contracts can be found in the Github repository. All smart contracts have been audited by CyberUnit.tech.

A user can deposit his LP tokens in the StakedLPToken contract in order to obtain a StakedLPToken ERC20. By doing so his LP tokens will be staked by the contract. StakedLPToken has a reinvest() function which anyone can call. This function redeems the pending staking reward for all the users who have deposited their LP tokens, and use it to obtain more LP tokens and increase the balance in LP tokens of the StakedLPToken contracts. In this way the number of LP tokens owned by anyone who owns the StakedLPToken will increase every time that the reinvest() function is called. In exchange the caller will be rewarded with a reinvest bounty which is a percentage of the total reward.

Normally, on Impermax a new pair can be created through the address of an LP token (the UniswapV2Pair contract). However, the StakedLPToken contract has an interface that mirrors the one of the wrapped LP token, and this allows it to create a new pair on Impermax for a StakedLPToken. Practically speaking, by doing this we enable the use of StakedLPToken on Impermax as collateral. This enables liquidity staking on Impermax while leaving the staking logic outside of the core contracts.

Liquidity Staking on QuickSwap

If you want to learn more about Impermax or to ask any question about liquidity staking you can join the Impermax Telegram group.

We're developing a DeFi ecosystem that will enable investors to leverage their LP Tokens