lots of users of Algorand blockchain hear about xAlgo but either don,t understand it , or have worries from it .
I hope in this article the xAlgo mestery will be solved for you guys .
Reminder
- First i will try to talk in a simple way for new readers to understand things and have to remind you about some points for new people reading about Algorand :
ALGO which is the native Algorand cryptocurrency, and is a cornerstone of its network structure. As part of Algorand's unique protocol design and It is used to:
pay for transactions.
purchase on-chain items such as NFTs.
purchase goods and services.
participate in DeFi as an investor.
participate in governance, and earn rewards.
secure consensus among participation nodes.
- The Algorand Foundation introduced decentralized governance in Q4 2021 & ALGO holders can participate in the growth, direction and development of the Algorand ecosystem, and in return they are rewarded for their contribution but in order to be a governor, the current Algorand Foundation model requires users to commit their ALGO for a 3-month period. During this time, users must maintain their committed ALGO balance in their wallet in order to be eligible for rewards. This means that users’ ALGO are illiquid and effectively locked if they plan to earn rewards.
Then Folks Finance Liquid Governance solved this problem by introducing a new token called gALGO, ( Which isn,t our main subject here ) and minted one-to-one with committed ALGO used in governance. Users can access their gALGO freely and utilize them as they wish within the Algorand ecosystem: as collateral on Folks Finance, liquidity on DEXs, to purchase NFTs, etc. -
Then Folks Finance introduced to us xAlgo the interest-bearing ( Value Accumelated) asset that brings Algorand governance yield to other chain to bridge Algorand across other chains like BNB Smart Chain and Avalanche chains and Users can provide liquidity at the same time across these chain DEXs’ liquidity pools and get trading fees.
xAlgo is an interest-bearing asset that is backed by underlying Algo committed to Algorand’s governance & The vital thing to note here is that xAlgo is always backed by the Algo committed to Algorand’s governance mechanism.
What is xAlgo, and how does it work?
What does it mean for a wrapped token to "depeg" from its underlying asset?
When a wrapped token "de-pegs" from its underlying asset, it means that the market value of the wrapped token has deviated from the value of the underlying asset. Ideally, a wrapped token is intended to be maintained at a predefined ratio with its underlying asset. However, external factors such as market fear, uncertainty, and doubt (FUD) can cause the wrapped token's value to fluctuate independently.
What is the ratio of xAlgo to Algo?
The ratio depends on the amount of Algo deposited in the xAlgo mint pool compared to the amount of xAlgo in circulation. For example, if there are 100 Algo and 100 xALGO at the beginning of governance, the ratio is 1:1. At the end of governance, assuming a reward rate of 15%, 15 ALGO will enter the pool. The new ratio will be 115/100 = 1.15 This means that to mint 1 xALGO, you will need to burn 1.15 ALGO.
Xalgo was introduced across 2 chains tell that day Binance Smart chain (which isn,t our main subject ) & AVALANCH chain .
By partnering with TraderJoe and BenQi, xALGO holders can provide liquidity in the xALGO-Avax and xALGO-sAvax pools. on AVALANCH C chain
How to obtain Xalgo?
you can get Xalgo by many ways like :
1- mint it during sign up for Governance like in the pic below From Folks Finance
please be noted the Windows open the 2nd week of each GOV period start , normally the 2nd week of start of each Quarter of the year
2- have to have an AVAX wallet on Avalanche C chain and have some AVAX or USDC in it and swap it against Avax like in the pic below
How to make use of Xalgo and make money of it:
u can make money of xAlgo by many ways like
1- just hold it in yr wallet and either redeem it when GOV period ends for an accumulated value by time without caring you might miss voting for governance on algorand each Gov period
2- just trade it and swap it when u see price defference in your favor as in the pic above
3- put it in pools as u see in the pic on TraderJoe platform from the FolfsFinance page as u see in the pic below
and this is a sample of the profit from fees users make daily with estimated future rewards :
if u got confused from the 2 defferent pools AXAX/xAlgo & sAVAX/xAlgo you can read more in the link here
What is the difference between Avax and sAvax?
https://docs.benqi.fi/benqi-liquid-staking/staking-and-unstaking/savax
And to take full advantage of the potential of TraderJoe, the above pools are available in V2 version.
How to provide liquidity into xALGO/Avax - V2
- Open here the xALGO-Avax pool
- Insert the amount of xALGO and sAvax you want to provide. Please refer to their official documentation to learn how TraderJoe liquidity provision works. https://support.traderjoexyz.com/en/articles/6792387-adding-removing-liquidity
- Click on ADD LIQUIDITY
Provide liquidity into xALGO/sAvax - V2
- Sign the transaction with your wallet
- Open here the xALGO-Avax pool
- Insert the amount of xALGO and sAvax you want to provide. Please refer to their official documentation to learn how TraderJoe liquidity provision works. https://support.traderjoexyz.com/en/articles/6792387-adding-removing-liquidity
- Click on ADD LIQUIDITY
- Sign the transaction with your wallet
now that i tried as much as i can to explain Xalgo and how to use it to maximize your assets value all i can say if u have any enquiries u can either comment here os visite the following links
- https://docs.folks.finance/ for TXT reading or
- https://academy.folks.finance/ for TXT and videos on how to use the service in more details .
- the official DISCORD Folks Finance where you can have life feedback and please note that its better to close DM on discord or don,t reply unknown DMs cause there are lots of scammers there .
- the official telegram channel for them
