Saber Wars: Providing Liquidity on Saber → Yield Farming on Sunny Aggregator
Author: SMB 681
Alright anon, thanks for tuning in. As you are well aware, or should be, the battle for control of the Saber Gauges rages forward every day. With new ecosystem participants quietly claiming and locking their stake we’re never sure where this war will take us.
Alas, we fight our hardest in order to give our favorite pools / gauges a shot at providing us with those juicy $SBR and $SUNNY yields that we so crave.
I’m going to assume that you’re here because you’ve heard about the Saber Wars, you took the time to read my first article (if not, check it out to get up to speed), you went and got yourself some $daoSOL using the liquid staking pool, and now you’re wondering how you can use your $daoSOL to get further involved in these so called Saber Wars. In fact, you’re probably even thinking something along the lines of…..
“681, how do I start earning $SBR and $SUNNY tokens using my $daoSOL? I am but a young Padawan just beginning my humble journey wielding this Saber. How can I begin to exert my influence upon these gauges you’re so up in arms about!?!?”
First, I’ll point you to this awesome tutorial provided by the Saber team regarding providing liquidity here and then also run through a quick example of how to deposit your $daoSOL tokens into Saber in order to receive your new $daoSOL/$SOL LP tokens that you’ll need in order to farm on Sunny Aggregator.
After we conquer that beast, I’ll show you how to use the Sunny Aggregator to deposit those new LP tokens into Sunny’s Saber $daoSOL/$SOL LP strategy in order to earn higher yields on your $daoSOL tokens, remember, you can always withdraw your LP tokens from Sunny and then navigate back to Saber to unwind your LP tokens when you are ready to reclaim your original $daoSOL.
Today we’ll be using $daoSOL as our example instead of the USDT/ USDC pool used in Saber’s example from the docs. Shall we begin?
Saber DEX is an AMM who uses pools to provide liquidity, or the ability to trade, between tokens on Saber. For a more in-depth guide on what exactly a liquidity pool is please refer to this awesome resource put together by the MonkeDAO.
In order to incentivize liquidity provision (LP) these pools allow users to earn trading fees on the tokens they deposit into the pools. In our case, we’ll be depositing our $daoSOL that we brought over from the DAOPool. As you’ll remember, our original $SOL tokens are staked with the DAOPool already earning yield. When we put our $daoSOL to work, we will generate additional yield.
When users deposit their assets with Saber in order to facilitate increased liquidity, this helps the Saber protocol by reducing trade slippage, as such, Saber is willing to pay their liquidity providers (users) a small portion of the fees for their service.
Now let’s run through the process of using Saber to acquire some $daoSOL/$SOL LP Tokens using Saber and how to deposit them into the Sunny Aggregator.
Our First Step is to Make a Deposit into Saber’s LP Pools
Today we’ll be using the Saber $daoSOL / $SOL pair to supply our liquidity. In this example I’ll assume you have already followed my guide for obtaining your $daoSOL tokens here. Remember, if you’re holding idle $SOL in your wallet you could be earning yield by staking your tokens into a stake pool like DAOPool.
First, go to the Pools tab and select Deposit.
Enter the quantity of $daoSOL you would like to submit to the pool.
Next select the Deposit button. This will display a breakdown of the transaction you’re about to make:
- Deposit Currencies shows the amount of each token you’re depositing.
- New pool share shows how large your share of the pool will be after the transaction is made.
- Fees are determined by how different the quantity between tokens you’re depositing are. As mentioned above this is to incentivize close-to-equal distribution within the pool.
- Select Confirm Deposit. Depending on what wallet you’re using, you’ll likely be prompted to confirm the transaction via your wallet’s interface.
The deposit is now complete! On the bottom left, you’ll see a notification that contains a link to the transaction on Solana’s explorer.
You’ll also notice that you now have Saber $daoSOL/$SOL LP tokens in your wallet that represent your share of the Saber $daoSOL/$SOL LP pool.
Now that you’ve got the $daoSOL/$SOL LP tokens from Saber secured in your wallet its time to start farming.
Step 2: How to Deposit LP tokens in Sunny Aggregator for Higher Yields
Sunny Aggregator is a yield farming aggregation protocol similar to the likes of Convex Finance, or Yearn Finance. Sunny collects a 16% performance fee for the pleasure of farming users assets via their protocol. This fee is accounted for in the APY that you will see when you navigate to Sunny’s homepage here. Shown above is a high level overview of what Sunny is in the process of building out around Saber and the $SBR token.
Currently Sunny will allow you to farm both $SBR and $SUNNY tokens by depositing your $daoSOL/$SOL LP tokens. All performance fees charged by Sunny go towards funding 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.
Now you could take your $daoSOL/$SOL LP tokens and deposit them directly into Saber via their Active Farms and generate yield there (pool shown in image above), but I’d say you’re better off using Sunny because of the way it enables your farming rewards to be automatically compounded. Plus, you get paid in $SUNNY tokens as well as the $SBR reward you would receive using strictly the Saber pools. Therefore, parking your $daoSOL/$SOL assets in Sunny is the smarter route to take.
Since Sunny pays its users in both $SBR and $SUNNY tokens, you will now be receiving governance tokens for use in both protocols. If you remember from my first article, Sunny will play a role similar to the role that Convex plays in the Curve Wars. Not all of the mechanisms have been built out yet, but the team at Sunny is chugging away weekly. #wenBRIBES
When you’re ready to deposit your $daoSOL/$SOL LP tokens enter the amount of tokens you would like to deposit and then select the Deposit Saber LP button. Confirm the transactions in order to establish your Solana token accounts and to deposit the LP tokens. Once you have finished confirming your transactions, your LP tokens will be properly staked into the Sunny Aggregator.
Congratulations, you are now earning yield via Sunny that is paid in both $SBR and $SUNNY tokens. Check back every week to collect your yield payments. From here, you can kick back and relax, Sunny will automatically tally your rewards payments and you can collect them as you please.
In order to claim your rewards, select the Claim all rewards button and confirm the transactions that follow. There are a series of transactions that must be confirmed in order to receive the full reward. If you have issues with this process reach out to the Sunny team via Twitter or Discord, they are more than happy to help.
That puts an end to this rather long article, thanks for sticking in there with me. See you next time, where we’ll be going over a How to on Saber Governance.
As always, the Saber Wars rage onward!
Originally published at https://smb681.substack.com on February 5, 2022.
