There is a chance, with the current crash happening, you have some of your reserves in US Dollar stable coins. This could be a good opportunity to let your money work for you. One way to do that is to provide liquidity for a protocol. This means adding two assets to a pool which serves as liquidity for traders and earns trading fees.
In this blog post I will take you through the complete process of getting the right stable coins, adding liquidity and staking your LP tokens for extra rewards. In our case, the platform for this is IRON Finance.
IRON is already established on the Binance Smart Chain. They have created a partially collateralized stablecoin inspired by FRAX on the Ethereum Network. In short: they are partly backed by an algorithm and partly backed by crypto assets. More details can be found in their documentation.
Usually as a liquidity provider you have the risk of “Impermanent loss”, which I will not explain here but it could put your capital at risk if the price of one of the tokens in the pool changes. If both tokens are stablecoins however, this is not a risk to consider.
So let’s get this farming going:
- You need liquidity on the Polygon (former MATIC) Network
- To farm the IRON/USDC Pool, you need 50% IRON and 50% USDC.
I would recommend using
- Curve.fi (almost no swap fees for stable coins) for DAI/USDT/USDC
- 1INCH Router* finding the best swapping route along multiple exchanges for buying the IRON part (*referral link)
So once you have swapped your existing stable coins or even your other coins into half IRON half USDC, it is time to add the liquidity. This step is mandatory and will grant you a LP token. Go to https://polygon.iron.finance/farms and click on the IRON/USDC Pool.
In our case the token is created on SushiSwap. To do this follow the link on the IRON/USDC Pool “Add liquidity” (or click here).
Now this token will already earn you swapping fees in this pool. They can be claimed by removing the liquidity later. On top of that, this LP Token can now be staked in a farm like IRON Finance’s. Click on “Stake” and add the amount of Tokens you want to stake. Confirm the transaction and you are done!
You will earn your rewards in the TITAN token, which is the bond token of IRON Finance. You can either sell it or stake it in other pools. Learn more about TITAN in the IRON docs.
I hope this article helped you. Please let me know if you would like to know more about other crypto related topics. I like to cover all things DeFi on Binance Smart Chain, Polygon and Fantom.
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None of this is financial advice. Please always do your own research.
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