*obligatory not financial advice*
I already mentioned Alien'sFarm in an older post, but there has been a big update on the platform so I decided to write a new article about its new Mining section.
What is Alien'sFarm?
Alien'sFarm is a new DEX on the Tezos blockchain. Until recently you could only farm its governance and utility token PAUL on the platform, but now it has finally liquidity pools and it’s AMM. The platform is all about offering its users opportunities to earn a high yield, it still offers farming and will continue to do so to reward its users, but now it also has a "mining" feature where users can stake their PAUL to earn a share of the swapping fees.
There is no hard cap for PAUL tokens and it has a constant emission. That is because it is mostly used to incentivise providing liquidity to the exchange. Without PAUL rewards there would be less reason to keep funds in the liquidity pools on Alien'sFarm and its ecosystem could suffer from that. However, since most users are concerned about inflation, there are a few burn mechanisms to keep the supply in check.
The amount of new PAUL made per block will be lowered constantly to reward early adopters more and the baking rewards of XTZ in pools of the exchange will be used to buy and burn PAUL. There will also be other mechanisms like using trading fees to burn PAUL, the goal is to make it deflationary.
The utility of PAUL is that it lets you earn a part of the fees. Under the "Mining" tab you can see all the different liquidity pools and you can stake your PAUL at a pool you like to earn 0.05% of the fees on this pair. The rewards you can earn depend on how much of the staked tokens are yours and the rewards come in both tokens of the pool. You earn rewards in both tokens because the trading fee is paid in which ever token is sold to the DEX. For example if you trade PAUL for uUSD, then you have to pay the 0.05% fee in PAUL, if you trade uUSD for PAUL then you pay it in uUSD. So if you stake PAUL at the KALAM/hDAO pool you will earn both KALAM and hDAO.
The APY depends on how much is being traded with the pool and on how much PAUL is being staked in total. This means that smaller trading pairs still have a chance at earning a decent yield, because although there will be less fees, there will be likely less PAUL staked and you can earn more of the fees for yourself.
This mining feature is brand new and there are many pools that offer a high yield and it could be worth to take a look at it.
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