Introduction to Symbiosis
Symbiosis Finance is a dApp that seeks to connect all EVM-compatible chains. Through Symbiosis, you can swap tokens to and from the Ethereum, BNB, Polygon, and Avalanche chains. Many more chains are live on testnet and slated to be added in the near future.
While Symbiosis is fairly new (it debuted in December of 2021), it has already amassed an impressive $2.8 Million in total value locked as of the time of writing, and this figure has grown substantially over the past several days. So, how does it work?
In its current model, Symbiosis uses only stablecoins and s-stablecoins. These s-coins are mirrored representations of cross-chain assets deposited for the purpose of liquidity. Say, for instance, that I wanted to provide liquidity for swaps between Polygon and Ethereum. For this to work, assets from both Ethereum and Polygon are needed.
In this instance, Symbiosis uses sUSDC, a token on Polygon's blockchain that's representative and exchangeable one-to-one with Ethereum USDC, as well as native Polygon USDC, providing the liquidity pair that's the basis of all swaps between MATIC and ETH's chains.
How to Earn High Stablecoin APRs with Symbiosis
This brings us to the most interesting aspect of Symbiosis: the ability to earn high yields on stablecoins. Since providing stablecoin liquidity is as low-risk as it gets (since stablecoins aren't subject to the extreme volatility of most other cryptocurrencies), stablecoin LP pairs traditionally yield low (for DeFi) returns, to the tune of 1-10% APR. This is mainly because liquidity relative to reward rates are high on stablecoin pairs, since many LPs are looking for low-risk returns. In other words, returns are typically proportionate to risk.
With new platforms like Symbiosis, however, liquidity hasn't reached its peak yet since it's still somewhat "undiscovered". As such, these stablecoin pairs are able to offer a high rate of return, since the amount of cross-chain volume relative to liquidity is far higher than a better-known DEX like UniSwap, PancakeSwap, etc. Since Symbiosis liquidity providers earn 80% of exchange fees, they're able to amass great returns.
To be clear, APRs should be expected to drop as liquidity increases on the platform. With more LPs, you'll make up a smaller percentage of total liquidity and earn less. Still, APRs may be upwards of 50% for a while and that's incredible for something as low-risk as stablecoins.
That's not to say there's no risk at all. As a newer platform, Symbiosis hasn't been around for long enough to say its smart contracts are bug-free. Even years-old dApps fall prey to hackers on a regular enough basis, so understand that, as all things in DeFi, providing liquidity for Symbiosis is far from risk-free. Still, the risk-reward ratio is certainly appealing.
Now, let's look at the entire process of adding liquidity to generate these aforementioned returns.
Pick an LP Pool and Swap for Some Stablecoins
Before you can provide stablecoin liquidity, you'll naturally need some stablecoins. Symbiosis only supports one stablecoin for each chain (plus some mirrored pairs) so make sure you choose the right one before making any swaps.
The best way to do this is to view all of Symbiosis' liquidity pools. While it may be tempting to choose the one with the highest APR, it's essential that you factor in gas fees. If you're a small-scale LP looking to provide $100 or so, you'd best stay away from any Ethereum transactions, as just depositing liquidity would eat into roughly 10% of your principal.
For this reason, Polygon is almost always the best. Transaction fees are tiny compared to even the Avalanche or BNB chains. Additionally, at the time of writing the Polygon/BNB and Polygon/Avalanche pools paid the highest APR, so it's a win-win.
Once you've chosen a pool, decide whether you're going to provide a regular stablecoin or an s-stablecoin. To do this, click on a pool and then select Currency Reserves. This displays a UI like the one below:
Symbiosis pays better rewards to the stablecoin with lower liquidity. For this reason, you should try and provide the less-common stablecoin. For instance, in the example above you'd want to provide BUSD, since it makes up only 44% of the pool, versus sUSDC's 56%.
Finally, swap to your stablecoin or mirrored stablecoin of choice.
Swapping to Stablecoins
If you have a balance of any token in your wallet, use a DEX to swap to the stablecoin that you need. If your balance is on the wrong chain (for instance, if you want to provide Polygon USDC and have a balance of BNB), you can use Symbiosis' Swap to move your assets to the correct chain. After all, that's what it's built for. Note that Symbiosis requires a minimum transaction size of $50, so make sure that you have enough to send crypto cross-chain.
Swapping to Mirrored Assets
If the proportion of mirrored assets in a pool is low, you may want to provide some of these instead of regular stablecoins. These can only be acquired via Symbiosis.
To get these, click on any pair on the Pools page and click Get sUSDC (or sBUSD if your pool requires it). You'll be taken to the swap page with sUSDC set as the output. Select your input chain and token and complete the swap to get a balance of mirrored stablecoin assets.
Add Your Liquidity
Now that you finally have some stablecoins or their mirrored equivalent, it's time to deposit them into one of Symbiosis' liquidity pools. Within the app navigate to Pools and select your chosen pair.
Note that, unlike many liquidity pools, you only need to deposit one asset. Specify the amount you wish to deposit and click Approve <Stablecoin>. Approve the transaction on MetaMask and wait for it to be mined. If you're depositing both a stablecoin and a mirror (e.g. USDC and sUSDC) you'll need to approve both.
Finally, click Add liquidity and confirm the transaction. Once the transaction is complete, you'll be earning high APRs on your stablecoins. As announced on Symbiosis' Telegram, while the full implementation of LP tokens is under development rewards will be paid out based on snapshots taken throughout the month, at the end of the month. Thus, while rewards won't show up in real time, they are accruing.
How to Remove Liquidity on Symbiosis
Cashing out and removing your liquidity is just as easy as adding it. In the My Liquidity interface, select the pool that you want to withdraw from. Instead of selecting Add liquidity, click Remove. Drag the slider to adjust the amount, or click Max to withdraw all.
Select the token you want to withdraw. In almost all instances, you'll want to select the actual stablecoin, not the mirrored asset. Thus, in the instance below you would select USDC rather than sUSDC.e.
Finally, approve the token if necessary and click Remove. Click Confirm in the window that pops up, and approve the transaction via MetaMask. Once the transaction goes through you'll see the stablecoin balance in your wallet.
That's all it takes to earn high stablecoin yields. Good luck, and happy liquidity farming!