Before we get started, this is not a recommendation or endorsement to buy any token(s) mentioned.
This week, we cover an up-and-coming Stacks AMM optimized for trading stable assets with minimum slippage and fees, called BitFlow!
Inspired by Curve Finance, BitFlow is a decentralized exchange (DEX) that enables users to trade and earn with pools of highly correlated assets (ie stablecoin pools or like-kind pairs such as STX-stSTX).
Launched in December 2023, BitFlow leverages tech such as Partially Signed Bitcoin Transactions (PSBTs), Atomic Swaps, L2 smart contracts, Stacks Bitcoin (sBTC), and decentralized liquidity pools to unlock the full potential of Bitcoin DeFi.
BitFlow offers a number of familiar benefits we’ve enjoyed on Curve Finance.
Trade Stable Assets Efficiently: Thanks to liquidity pools specifically optimized for minimal slippage and fees, traders and LPs enjoy greater capital efficiency than other AMM models.
Single-Sided Liquidity: Liquidity providers can add or remove liquidity with a single pool token, without the need to manually prepare and deposit an equal amount of two distinct assets.
Earn Real Yield: Historically, Curve has demonstrated consistent top trading volume with demand to swap stablecoins and stable assets. With increased volume, comes increased fees and yield for LPs derived from real trading activity.
In addition to the real yield, BitFlow has introduced BitFlow Points to reward early LPs for contributing to the future success of the protocol. Currently, you can earn liquidity points through staking LP Tokens on the Earn page of the app. Points for referrals and additional DeFi activities are coming.
Today, I’ll cover how I’m providing liquidity and earning points on BitFlow!
How to Provide Liquidity and Earn Points with BitFlow
Before we get started, please be aware of these risks.
- Smart contract risk in BitFlow
- Front-end spoof attack on the app frontend
- Oracle risks
- An economic design exploit
- Colluding signers on any multisig
- Impermanent loss despite it being minimal in stable asset pools
- Stablecoins can depeg and pools can go to $0
Here’s how I get started!
- First, I go to the Pool tab on the app, connect my Stacks Wallet (ie Xverse) and choose a pool with assets I want exposure to or already have exposure to. In this example, I’ll assume I have STX or stSTX by StackingDAO.
- Then, I specify however much of either asset I have, click Confirm, and follow the prompts to confirm depositing via my Stacks wallet.
- Lastly, I go to the Earn tab, and choose the related LP to stake. I can follow the prompts to specify staking all my LP tokens and for how many cycles (aka days). The longer I stake, the more I earn.
That’s it! I can return to the Earn tab to claim my rewards and later reclaim my LP tokens whenver I ever choose to exit them in the future.
For more DeFi video tutorials, podcasts, and insights, follow me @DeFi_Dad on Twitter and subscribe to my YouTube channel, and The Edge Podcast at defidad.com. If you’re a crypto builder raising capital, my team and I would love to talk at 4RC (Fourth Revolution Capital).
DeFi Dad is one of the earliest power users of DeFi, having worked with early Ethereum startups going back to 2018, including Zapper.
