Author: SMB 681
Saber DEX is one of the largest dexes on Solana both by daily volume and by TVL metrics. In this article I’ll break down the reasons why I think Saber is about to become the “Curve of Solana” and why you should be paying close attention to a not so well known project named Sunny Aggregator.
At its peak in September Saber accounted for $4.15b worth of TVL on Solana. An impressive feat for a DEX only a few months old.
Saber has enacted its protocol governance effectively kicking off what people are dubbing the Saber Wars.
If you have ever used Saber LP pools then you’ll know that they provide yield paid in their native token ($SBR) in order to compensate users for depositing their LP tokens to the various pools offered by Saber.
With the enactment of governance structures for both Saber and Sunny, your $SUNNY and $SBR yields for each LP pool will now depend on the results of the gauge votes!! We’re still fairly early, but a battle for yields is already shaping up with interested actors (myself included) locking large amounts of tokens in order to sway the gauges.
Similar to the Curve Wars on Ethereum, the gauges of Saber (think Curve) and Sunny Aggregator (think Convex) are both up for token holder governance. Each epoch a vote is taken to determine the % share of yield given to each LP pool (like the daoSOL/SOL pool above), one epoch lasts 7 days. At the end of each epoch, the gauges are updated to their new weights based on the votes submitted.
Basically you lock your tokens and vote for the gauges that will benefit you. These votes then translate into %’s for how much $SBR or $SUNNY tokens (yield) will be distributed to each LP pool.
Different locking durations will increase your votes, so the longer you lock, the higher your voting power. Locking periods are 7d 30d 1y and 5y.
As you can see, many people are already locking their tokens and using their votes to move the gauges in their favor in order to give their favorite LP pools higher yields.
The gauges have such a drastic impact that even just a 3.38% share of the Saber gauges for the last epoch allowed the prtSOL/pSOL LP pool to jump 19% APY on the Sunny Aggregator protocol (paid in $SBR tokens) after the latest epoch updated. Prior to the gauge changes this prtSOL/pSOL LP pool was only paying 5% APY collectively between both the yielded $SBR and $SUNNY components.
Saber gauges are 100% worth paying attention to, and this will only continue to get more interesting as more people start to understand the new governance structure. Saber governance has only been live since the start of January, so many people are still sleeping on this whole thing.
Huge amounts of $$$ are being doled out weekly via yields paid in $SBR and $SUNNY tokens. Massive incentives are at play here so there is a huge advantage to getting involved and being positioned early as both an individual and as a protocol.
As you’ll see, not only will individual users be getting involved in the Saber Wars, we’ll actually see large protocols begin to compete for votes as well. Some will even lock $SBR of their own in order to vote for their own pools to receive $SBR and $SUNNY yields thereby further enticing users to deposit more liquidity into the pool to take advantage of the increased yield from higher gauge share.
The gigabrains at Race Capital are one of the first stakeholders to lock their entire share of $SBR tokens for 5 year maximum. Clearly they understand the power that having the max amount of votes allows you.
I also see this as another huge signal of faith in the Saber team by Race who has locked up their holdings for 5 years. 5 years is a LONG time in crypto-land and to have the conviction at such an early stage of the project, Race must see a future where Saber becomes a dominant player in the space. They clearly see Saber as a high conviction play long term. Being one of the earliest investors to both FTX and Solana, Race Capital certainly sees something in both Ian and Dylan as founders, personally, I wouldn’t bet against a Race Capital project.
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Getting back to Sunny Aggregator for a second, as Sunny is heavily involved in the future of Saber….
As you can see above/below from the proposals on the Saber DAO forum Sunny is also already planning to create bribes around the Saber token, similar to Convex.
This would mean that Sunny will pay users (and other protocols) to lock sunSBR an interest bearing version of the SBR token.
This will allow Sunny to accumulate a large share of the SBR tokens, and using its own DAO governance, it will be able to significantly sway yields for Saber’s gauges allowing Sunny users to be receiving some of the highest yield rates on Solana.
Clearly some big big moves being made behind the scenes at Sunny as far as I can tell.
Currently Sunny will allow you to farm both $SBR and $SUNNY tokens by depositing your Saber LP tokens. All performance fees charged by Sunny go towards the Sunny DAO, and this revenue will partially be used to perform buyback and burns of $SUNNY.
The performance fee is currently 16% taken on non-$SUNNY yields. The APY displayed in the Sunny app already takes into account the performance fee. At launch, the buyback and burn feature is not yet implemented, but rewards will be accumulated in an account belonging to the Sunny DAO.
Shown below is a high level overview of what Sunny is about to build out around Saber and the $SBR token. This diagram should look very similar to the way Convex interacts with Curve.
Essentially you’ll receive a “bribe” payment for allowing Sunny to use your SBR tokens. (Step 4) In return for giving Sunny your SBR, you receive sunSBR which will have an interest bearing property.
The idea being that the more SBR that Sunny can acquire and lock to use for voting the Saber gauges into its favor, the better. So Sunny will use “bribes” to make sure they are offering a very lucrative incentive to ensure users deposit their $SBR with Sunny.
Just prior to the last Sunny epoch closing someone or an entity deposited 173m $SUNNY tokens into the lock up contract for governance use. Just speculating here, but those votes 1.7b all went to the UST/USDC LP gauge. Alameda? Do Kwan with Terra Labs? Whales?? Whoever it was, they caused a massive movement in the gauges though.
It looks as if they’ve locked for the full 5y period as well in order to receive their full voting power. Another whale with conviction, love to see it.
Also the math adds up to all but confirm the 5y lockup. 3 hours prior I had taken a screenshot where there was about 339,344,966 $SUNNY Locked in governance. The total after this large 173m $SUNNY deposit was at 512,751,757 $SUNNY locked into governance. That gives you about 173,406,791 difference. If you multiply 173m by 10x for the 5 year lockup then you’ll have a 1.73b votes, or approximately the amount that voted for the UST/USDC LP gauge.
Either way, whoever just locked up is playing a long term game here. Another good sign for users going forward. Serious players are starting to lock up big stake, and that’s huge. For reference, 173m tokens is about 5.5% of the total circulating supply for Sunny at time of writing.
With yields this high for stablecoin pairings like UST/USDC it sure does pay well to deposit your LP tokens into Sunny Aggregator. Voting for your own pools to receive more yield seems like a no brainer, all you have to do is lock your $SUNNY and $SBR tokens for voting.
Hopefully this article helped to get you up to speed a bit more on the Saber Wars on Solana. Thanks for reading and make sure to tune in for my next article where I’ll continue to dive deeper into Saber and Sunny.
My suggestion for people looking to get involved in using Saber and Sunny is to start by staking their SOL using DAOPool https://twitter.com/DaoPool for liquid staking similar to Marinade Finance’s mSOL.
SOL → daoSOL → deposit daoSOL to Saber daoSOL/SOL LP → deposit daoSOL/SOL LP into Sunny for yield farming.
And then use your $SBR and $SUNNY rewards to vote in both protocols governance
As discussed, Saber and Sunny are both up for governance by the DAOs now, so yields are dependent on DAO voting so you can lock your rewards to vote yourself more yield if you wish, or sell your tokens for more SOL or USDC. Truly is your preference.