Recently, the arbitrage program I shared on the blog has been a great hit, so with the support of everyone, I will continue to update this series.
Today I will introduce to you how to use Torches lending service to maximise the profit of KuCoin BurningDrop. Of course, it is very easy to operate and let’s start to learn to earn.
What is KuCoin BurningDrop
Our new friend in this instalment. Burning Drop is a fair token distribution platform on the KuCoin exchange that provides rewards. Users must deposit and lock a certain amount of crypto assets to gain access to the token.
Users can also designate tokens to increase computing power for more tokens. The Burning Drop feature has already been used to distribute tokens for several projects, including TCP, HORD, OLE, etc. According to Burning Drop statistics, the average ROI of projects surpassed 8,685%.
This time, we will also use Torches Finance, the hot lending protocol based on KuCoin Community Chain(KCC) and another new friend KuCoin BurningDrop. So, please make sure you have a KCC wallet. If you haven’t set up your KCC wallet, you can see this tutorial to set up your KCC Wallet first.
In the beginning, we need to lend some assets as a fund because if you want to join KuCoin BurningDrop to mine coins, you should stake ETH, USDT or KCS firstly. And then choose one and more types of BurningDrop projects to mine coins, it is noted that KuCoin BurningDrop only locks the liquidity, not users’ tokens. According to your choice, the calculation method of rewards that you finally will receive is different.
How to Arbitrage
If you want to join BurningDrop to mine coins, firstly you need some assets as a fund, such as USDT, ETH and KCS. Suppose you just have stablecoins or want to reduce the losses caused by the price fluctuations of KCS and ETH. In that case, you can follow the tutorial below to deposit stablecoins such as USDT, and USDC to borrow KCS or ETH from Torches (KCS is the only fuel of the whole ecosystem, so you need to some KCS as gas fees).
There is a minimum amount and hard caps of individuals and the whole platform required for staking. If the amount is lower or higher than that, you won't be able to stake. Due to different BurningDrop projects having different calculation methods of rewards and the hard cap of a single user, so for easy understanding, we take OpenLeverage ($OLE) as an example in the following.
You can mine $OLE by staking USDT/KCS/ETH, these three assets. During the Burning Acceleration Period, users who have already staked can receive more $OLE rewards by burning $POL. Besides, the final rewards will be received in $OLE.
Expect for $POL Burning Acceleration, the hard cap of a single user is different from the staking assets in BurningDrop because there are three different types of assets for users to stake. Users are able to choose one type of asset to stake or stake three assets together. Here are two scenarios in the following.
The first scenario:
If you want to stake one of three required assets (ETH, USDT and KCS), you can stake up to 200 KCS or 2,000 USDT or 2 ETH. It is noted that in the three assets, users have the max OLE distribution coefficient of KCS, so we choose the KCS to stake as an example and the details of projects as below.
You can use stablecoins to lend 200 KCS on Torches and stake the borrowed KCS to mine $OLE on the KuCoin BurningDrop. According to the calculation method, the user’s Initial Allocation F = ∑(Individual staking amount of the chosen Staking Product * certain Distribution Coefficient * the price of staked assets in USDT at the start of the Subscription Period).
Assume that the price of KCS at the start of the Subscription Period is 9 USDT, thus your allocation will be 2,700 OLE(200*1.5*9 = 2,700) and then you can burn $POL to boost the mining rate to get your final allocation. The calculation method of burning POL is below:
- Accelerating Coefficient by burning POL, namely V = 0.18452 * arctan (25 * ε - 2.08) + 0.207166085, wherein ε = Amount of the POL user burns / F
- Single User Final Allocation after burning POL = F’
- F’ = (V+1) F
User Final Rewards of OLE = (F’ / Overall Final Allocation) * Total Amount of OLE
The second scenario:
If you want to stake three assets together, you can lend 2 ETH, 200 KCS and 2,000 USDT on Torches and stake the borrowed assets to mine OLE on the KuCoin BurningDrop. Assume that the price of KCS at the start of the Subscription Period is 9 USDT, and the price of ETH at the start of the Subscription Period is 1,500 USDT. According to the calculation method, thus your allocation will be 8,300 OLE(2*1.2*1,500 + 200*1.5*9 + 2,000 = 8,300) and then you can burn $POL to boost the mining rate to get your final allocation.
The content above is from my own opinions and does not constitute any investment advice. If you are also interested in arbitrage, welcome to share in the comments projects below.