The central theses:
- StraitsX Earn generates revenue by moving away from the role of liquidity provider to stablecoin liquidity pools
- Stablecoin pairs offer minimal volatility as the strong underlying currencies fully support the stablecoins
- StraitsX Earn only provides user funds to liquidity pools with a strong and trusted track record
- Yield is directly dependent on DeFi transaction activity and not crypto prices
StraitsX Earn offers StraitsX business accounts the opportunity to earn returns of up to 4% APY on their XSGD. To start using StraitsX Earn, companies simply need to allocate the minted XSGD from their StraitsX account into StraitsX Earn.
We are committed to our goal of creating a trusted stablecoin ecosystem while enabling companies to maximize the value of their XSGD.
StraitsX Earn generates income by providing liquidity to stablecoin liquidity pools
StraitsX Earn only holds user funds in XSGD or USDC and makes them directly available to DeFi liquidity pools (LPs). Transaction fees are paid when the liquidity pools are used to exchange between XSGD and USDC, so StraitsX Earn receives a portion of these fees as a reward for providing liquidity. This reward, in turn, allows StraitsX Earn to offer users a payout.
StraitsX Earn users’ funds are currently being deployed into the Uniswap XSGD/USDC liquidity pool. Providing such liquidity pools from XSGD/USDC pairings minimal volatility through stablecoins fully powered by strong underlying currencies unlike other crypto assets.
Why Uniswap?
- track record: one of the most groundbreaking, largest, most established and well-tested defi protocols
- business model: Yield depends on transaction volume fees, not crypto market prices. Funds are not borrowed or leveraged, reducing counterparty and default risk.
- Low liquidity risks: decentralized and permissionless, withdrawals cannot be stopped.
StraitsX Earn returns are not directly dependent on digital asset market prices
It is important to note that liquidity pool revenue is generated from usage and transaction volume and therefore asset prices play no role in revenue volume.
To illustrate, a bullish crypto market typically generates additional DeFi activity and hence transaction volume, leading to high returns in liquidity pools. On the other hand, a bearish market may result in less DeFi activity, but there will still be activity (and returns) in liquidity pools. There is always a basic use for stablecoin liquidity pools due to the arbitrage opportunities between the exchange rate of the stablecoin pair and the real exchange rate. In other words, whenever real SGD/USD exchange rates change, arbitrage leads to activity in the XSGD/USDC liquidity pool, which then generates returns.
StraitsX Earn absorbs LP reward volatility to provide users with stable returns
To further mitigate the volatility caused by DeFi transaction volume when DeFi earnings are low, StraitsX Earn strives to supplement payouts to users using corporate funds or past profits.
- When the Liquidity Pool (LP) rewards are higher than our payout rate to Earn users, we make a profit.
- If the Liquidity Pool (LP) rewards don’t meet our payout rate to Earn users, we use company funds or previously earned profits to meet the payout rate.
In the longer term, StraitsX Earn can adjust the payout rate to ensure business stability
We always give users a week’s notice of any interest rate adjustment and users are free to reallocate their funds at any time as they see fit.
Submit your interest in StraitsX Earn here today.
*This article was revised on January 9, 2023.
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