The first yield farming strategies are now live on TokenSets!
Today we are excited to announce the launch of our new line of products called Yield Farming Strategies! Like the recently launched DeFi Pulse Index, these strategies are built on Set Protocol’s new v2 infrastructure and are part of the second phase of the Set v2 rollout plan.
The first yield strategy to go live today is the ETH USD Yield Farm, which will farm the $UNI token automatically by providing liquidity to the ETH/DAI pair on Uniswap. In the future, the strategy could be extended to all ETH/stablecoin and ETH/bitcoin pairs.
We take security seriously at Set and always strive to ensure our smart contracts are as secure as possible through thorough external audits. However, with these new strategies, only the critical parts of the system were audited, with the Uniswap strategy contract managing the set only being audited internally. Users should be aware of this and exercise caution when depositing funds.
Important points
- The ETH USD Yield Farm is now available on TokenSets
- This strategy automatically farms $UNI tokens and reinvests the proceeds into the strategy
- Other yield farming products will follow shortly
There is currently no way to automatically rebalance between the best LP pair return opportunities (liquidity providers) on Ethereum (e.g. take a Uniswap liquidity provider position and place it in the pools with the best returns). The ETH USD Yield Set we launched today allows users to pay with a single asset and gain access to a strategy that automatically claims tokens from an LP farm, sells them for the underlying assets, and reinvests them into the farm.
The LP Yield strategies aim to make yield farming accessible to everyone – not just those who can afford Ethereum’s high network fees or have specialist or insider knowledge. To that end, we’ve made the LP Return Strategies as simple as possible – here’s how they work.
- Deposit – ETH and USD are deposited into the Uniswap ETH/USD LP pool, which is staked in $UNI rewards.
- claim – The farmed $UNI will be claimed and reinvested into the ETH/USD LP pool for more rewards.
- Repeat – The strategy repeats this process until it switches to a new pool to be managed.
output
Users can simply deposit either ETH or DAI into any of the strategies. In return, the user receives a corresponding ownership of the pool based on its net asset value. We call this innovative issue design “Net Asset Value Issuance” or “Issuing the Net Asset Value‘allows users to deposit any eligible ERC20 tokens to issue new sets without having to replicate the set’s positions. That means big gas savings for you when issuing and returning.
Upon entering the strategy, the user pays a 0.35% premium, which is distributed to existing members of the pool to prevent the Oracle mismatch arbitrage. This mechanism can be likened to an insurance deposit, where users get that deposit back if more people transact afterwards. This effectively increases the APY for long-term supporters of the strategy.
repayment
If a user wishes to exit any of these strategies, they can simply retire from their position on TokenSets, which we call “Redeem NAV‘ to exit the position on ETH or stablecoins. This incurs a 0.3% withdrawal fee and a 0.35% bonus for the user, which is effectively redistributed back into the pool increases the APY for long-term supporters of the strategy.
There is also a limit of 500 WETH or $200,000 in stablecoins for a user to redeem in a single transaction. This is to ensure that there is sufficient capital in reserve to allow for other redemptions.
The pool aims to allocate 1% of total capital to reserves to redeem from the pool, which is rebalanced whenever reserve assets fall below 0.5% of the pool’s total value. This reserve pool is used to provide redemption liquidity, which means that redemptions in excess of the amount available in reserves will not be processed.
As the pool of capital in the set grows, so does the size of the reserves and the amount of redemptions available. Although reserves are low, users are advised to redeem smaller amounts over time as the pool continues to rebalance its reserves to provide exit liquidity.
claims fee
ETH USD Yield Farm claims LP rewards every 24 hours and stakes ETH/USD. All LP bonuses claimed will incur a 5% fee, which will be paid to the set manager. This fee is used to pay for the gas costs required to claim, sell, and deploy the yield farm LP rewards.
When you deposit your funds, you will receive an ERC20 token called “Sets”. These can be stored in any Ethereum wallet that supports these tokens, such as B. MetaMask, Coinbase Wallet, Trust Wallet, Argent and many more.
The ETH USD Yield Farm uses Uniswap, an Automated Market Maker (AMM). For this reason, there is a risk of a so-called “immanent loss” with this strategy. Don’t let the name fool you though – losses can be permanent depending on when you enter and exit a Liquidity Provider (LP) position. When you participate in the ETH USD Yield Farm you are exposed to a temporary risk of loss and you should be aware of what this means for you.
We strongly recommend that you inquire about transient loss. This article will tell you what a temporary loss is.
Getting started with the ETH USD Yield Farm is easy as all you need to get started is ETH or the currently weighted stablecoin. Let’s go through a guide on how to start farming $UNI tokens with the ETH USD Yield Farm on TokenSets. Click here to start.
On this page you will find all relevant information about the ETH USD Yield Farm, including performance history, current composition and technical details such as the associated Ethereum address.
Once logged into your account, you can click at any time Obtain Click on the button that opens the purchase window. Enter the amount of ETH or stablecoins you want to use here.
Now you can click Buy preview Click the button to view your order summary. If you are satisfied with the order, click Submit purchase and then confirm the transaction on your Ethereum wallet. This will automatically convert your ETH or stablecoins into Uniswap LP tokens and deploy them into the strategy.
Congratulations – you are now automatically yield farming with the $UNI token, with all earnings reinvested to farm even more! You can keep this set wherever you normally keep your ERC20 tokens – be it in your favorite desktop or mobile wallet or in your TokenSets account.
The DeFi ecosystem is evolving rapidly, with new and innovative products launching every week. At Set we have been working intensively on the development of version 2 for several months now and as a result we will be able to ship products faster than ever before.
We have many more exciting releases ahead of us as we continue to roll out the Set v2 and beyond plan.
If you have interesting product ideas that you would like to see live on set, message us on Discord or email us at [email protected]. We would like to hear your opinion.
Will other yield farming strategies be available at TokenSets?
You bet! We plan to release new yield farming strategies on the TokenSets platform in the near future.
Are there any fees associated with yield farming strategies?
Yes, there is a 0.3% withdrawal fee, which is also paid to the manager when withdrawing funds from a strategy, and a 5% fee on the APY won.
What is the issue premium?
The entry and exit premium of 0.35% of NAV protects against oracle-related arbitrage attacks and is credited to existing strategy holders when they deposit or withdraw funds into a strategy.
Have the new contracts been checked?
At Set, we take security seriously and ensure that the base protocol smart contracts follow security best practices and are externally audited. However, the Uniswap strategy contract that manages the set is currently unaudited at the time of launch, so users should be aware and exercise caution when depositing funds.
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