Before we get started, this is not a recommendation or endorsement to buy any token(s) mentioned.
A new Arbitrum DEX called Chronos has attracted over $230 million TVL in its first 2 weeks since launching. Similar to Velodrome on Optimism, Chronos is a ve(3,3) exchange, using staking as a primary resource for accruing value to its token CHR.
Liquidity providers (LPs) earn CHR tokens for participating in two different types of liquidity pools based on the tokens being provided:
- sAMM – for strongly correlated pairs, such as stablecoins
- vAMM – for uncorrelated pairs, such as CHR and ETH
Given some liquidity pools on Chronos are paying as much as 2,600% to LPs in the form of CHR tokens, there has been a frenzy to participate in what’s now:
- The 2nd largest Solidly fork behind Velodrome
- The 4th ranked DeFi protocol by TVL on Arbitrum
- The 8th largest DEX in the broader crypto ecosystem
Like Velodrome, LPs earn emissions of CHR tokens proportional to the amount of liquidity they provide in pools. Staking LP tokens on the platform makes users eligible for CHR emissions, with base emission rates determined by Chronos gauges, controlled by veCHR voters.
By locking CHR for veCHR, users earn the right to vote on the platform’s gauges. Gauges control the rate of emissions to different liquidity pools on the DEX. Pools that receive more votes earn a greater proportion of CHR incentives for that epoch. Each epoch lasts for 7 days, after which all bribes and trading fees are distributed as a lump sum to voters. You earn only from the gauges (pools) you have voted for.
Today, I’ll demonstrate how I might start earning CHR tokens as a stablecoin LP on Chronos!
Earn Up to 42% APR with Stablecoin LPs on Chronos
Before we get started, please be aware of these risks.
- Smart contract risk in Chronos
- Systemic risk in DeFi composability
- Stablecoins such as LUSD are capable of de-pegging
- Front-end spoof attack on the Chronos app
- Chronos disclosed in its documentation there is one “medium-severity item” from a recent Certik audit, that involves CHR held in the deployer contract (centralization risk). These tokens are expected to be transferred to the emissions contract before launch, which will correct this issue permanently, according to Chronos documentation.
- I want to also caution users that with DEXs this new, getting lots of attention, it’s worth thinking about the size of any position deposited, as there’s a greater likelihood of losing 100% of funds due to some unforeseen circumstances.
Here’s how I get started!
1. First, I go to the Liquidity tab on the Chronos app and connect my Arbitrum wallet. I search for stablecoin pairs like LUSD and filter with the “Stable only” switch.
2. Next, I choose a stablecoin pair like LUSD/USD+ earning a maximum APR of 42.98%. I’ll need both LUSD and USD+ to enter the LP. I click on Manage.
3. I end up on this Manage Liquidity: LUSD/USD+ page under Deposit and specify how much of either token, and the required amount to form the LP auto-fills for the other token. If I need more tokens, I can trade on the Swap tab for Chronos. Assuming I have the proper amounts to deposit, I can now follow the prompts to Deposit & Stake (which will require 3-4 transactions). Lastly, I’ll be prompted whether…
DeFi Dad is one of the earliest power users of DeFi, having worked with early Ethereum startups going back to 2018, including Zapper.
