Before we get started, this is not a recommendation or endorsement to buy any token mentioned.
Previously, we covered the launch and growth of the ve(3,3) DEX Velodrome Finance on Optimism, which is a fork of Andre Cronje’s DEX design Solidly that failed in spring 2022. Another new AMM to implement the ve(3,3) design on Arbitrum is SolidLizard. SolidLizard launched in early February, following the shift in market momentum that involved countless new DeFi protocols gaining attention on Arbitrum.
As a DEX on Arbitrum, SolidLizard offers low-cost transaction fees, reduced swap fees (0.02% on stable pools), and uses a governance model called the ve(3,3) system, whereby those who lock their tokens for longer, get to claim bribes + trading fees from LPs while voting to direct token emissions as a reward to liquidity providers. The net result of this ve(3,3) AMM is to increase token yield, reduce inflation of native tokens while controlling the circulating supply of the token, and create an environment where users can choose to collaborate and create a cycle of growth that reinforces itself over time.
As of today, SolidLizard has grown to over $78M TVL, putting it in the top 10 dApps on Arbitrum. However, SolidLizard is only doing about $1.6M in 24-hr trade volume as of this writing, topping out at $12M on its highest trade volume day in February. In addition to the risks of using a newly launched AMM, little is known about the team (see below), which has me personally on guard as to whether or not the team possess any centralized controls over the code that could compromise user funds. Hence, I proceed with extreme caution!
We are a multicultural team based in central Europe and Asia. Our members have multiple successful experiences in Web 2.0 and Web 3.0 projects. Our dev team built some multi million TVL projects on the BSC during the last bullrun. That’s something we are aiming to do again on Arbitrum, our new home.
Today, I’ll demonstrate how I might earn 16-40% APR with a stablecoin LP staked in SolidLizard.
How to Earn Up to 16-40% APR with Stablecoin LPs on SolidLizard AMM
Before we get started, please be aware of these risks.
- Smart contract risk in SolidLizard
- Systemic risk in DeFi composability
- Stablecoins are capable of depegging
- Front-end spoof attack on the SolidLizard app
- Admin key risk
- Governance attacks on SLIZ
Here’s how I get started!
1. First, I go to the Liquidity tab and rank LPs by APR, looking for LPs with only stablecoins. I pick the one highlighted above in red for USDT/USDC with $15.6M TVL, a base 18.7% APR and a chance to earn up to 40% APR if I ever buy and stake SLIZ. However I’ll skip that step with SLIZ because I don’t want exposure to SLIZ other than the rewards I earn at this time.
2. Next, I connect my Arbitrum wallet and click on the USDT/USDC LP to add liquidity. I’ll need about a 50/50 ratio of both tokens to deposit and create the LP. It will require 3 transactions (2 Approval + 1 Deposit).
3. Lastly, once I have the LP tokens, in the same page I can flip a switch saying I have the LP token, choose the LP from the dropdown, and stake it here to earn about 16-18% APR. And again, I don’t need SLIZ or veSLIZ unless I…
DeFi Dad is one of the earliest power users of DeFi, having worked with early Ethereum startups going back to 2018, including Zapper.
