Folks Finance Goes Cross-Chain

xAlgo is a cross-chain liquid governance token built by Folks Finance. At beginning of 2024 Folks Finance announced they had brought xAlgo to the Avalanche blockchain.

In this post I'll be sharing some of my strategies to earn additional rewards from these recent development.

What is xAlgo?

xAlgo is a game-changing liquid staking derivative, a yield-bearing version of Algo. It capitalizes on Algorand Governance rewards, continuously accruing value as interest from the collected Governance rewards. Previously launched on BNB Smart Chain, xAlgo now expands its reach to Avalanche, offering users on this network the opportunity to tap into Algorand's governance rewards seamlessly.

The reason xAlgo is yield-bearing is when a user mints their Algo to xAlgo, Folks Finance leverages that Algo in Algorand's Governance to earn rewards. These rewards are then automatically applied to the redeem quantity once the next Governance window opens. You can only mint and burn xAlgo during a Governance window, at the start of each quarter (January, April, July, and October) as Folks needs to definitely define the number of Algos participating in the Governance period.

Wormhole Bridge 

To bridge xAlgo to Avalanche and BNB Smart Chain, Folks Finance leverages a partnership with Wormhole. You can read about this partnership in a Wormhole case study. It's important to understand the risks with bridged assets, but by researching the providers and partnerships can help you understand how the platform works.

How to Obtain xAlgo?

There are two primary methods to acquire xAlgo: swapping and minting. Users can swap for xAlgo directly in the Folks Finance dApp. Alternatively, minting involves committing Algo on the Folks Finance app, initiating the minting and depositing of xAlgo into an Avalanche wallet. 

Swapping xAlgo

Although you can only mint and burn your xAlgo during Governance period commitment windows you can always swap AVAX for xAlgo on Folks Finance. Below is a simple tutorial created by the Folks Finance team in their Folks Academy platform.

Minting and Burning xAlgo

During the first two weeks of each quarter users are able to mint xAlgo, bridging your Algo to Avalanche or Binance Smart Chain. This minting bridges your Algo to xAlgo on other chains. Burning your xAlgo will bring your Algo back to the Algorand blockchain. Your bridged token amount will accurately reflect the rewards yield for the Governance period(s) you held your xAlgo as a bridged asset.

Trader Joe (Avalanche DEX)

Folks Finance has partnered with Trader Joe, a DEX built on the Avalanche blockchain. They have provided additional rewards for those providing liquidity for any of the pools below. 

• xAlgo-Avax
• xAlgo-sAvax

You can find more information about the pools and xAlgo in Folks Finance's documentation. Be sure to keep your provided liquidity in balance on Trader Joe to continue to generate fees and qualify for more rewards. 

A Step Towards Cross-Chain Future

With xAlgo's integration into Avalanche, the possibilities for DeFi use cases are expanding. Offering continuous rewards, an interest-bearing structure, and seamless interoperability across chains, xAlgo signifies a step towards a cross-chain future. By following the outlined steps, users can seamlessly mint, burn, and provide liquidity, ensuring to earn additional rewards and bring Algo Liquid Governance ecosystem across various networks.

As Folks Finance continues to pioneer innovative DeFi solutions, the launch of xAlgo on Avalanche marks yet another milestone in the journey towards a more interconnected and accessible decentralized financial landscape.