Single Sided Liquidity (SSL)
The SSL Program will be used for Tren Finance's Liquidity Generation Event
Last updated
The SSL Program will be used for Tren Finance's Liquidity Generation Event
Last updated
The Single Sided Liquidity (SSL) Program enables users to contribute stablecoins to establish or augment liquidity pools with Tren Finance’s synthetic dollar, XY. This approach simplifies the liquidity provision process by allowing users to deposit stablecoins without the need to acquire multiple tokens. With SSL, users simply need to deposit their stablecoins. Tren Finance’s Liquidity Generation Event (LGE) is facilitated through the Single Sided Liquidity (SSL) contract.
Users deposit stablecoins into the SSL contract, which then mints an equivalent amount of XY tokens. These XY tokens are paired with the deposited stablecoins to form a liquidity pool. For instance, depositing 500 units of a stablecoin results in the creation of 500 XY tokens, culminating in a total liquidity of $1,000. The flow for depositing stablecoin(s) into the SSL is shown below:
Users can withdraw their contributions by removing their share from the liquidity pool, receiving back their initial stablecoin deposit along with any accrued rewards. Users may withdraw more stablecoins than they initially put up as swap fees from DEX are autocompounded back into the position. There are no locks however there is a 14 day withdrawal period when withdrawing for stability reasons. The flow for withdrawing stablecoin(s) from the SSL is shown below:
Rewards in TREN are earned every second using an amended MasterChef-style contract for reward distribution. This ensures that users’ rewards are continuously calculated in real-time based on their stablecoin deposit and the time their funds remain in the SSL Program.
While users can see their rewards accrue, they won’t be able to claim them immediately. The claiming function will be added to the contract after the Token Generation Event (TGE). Once this function is implemented users can claim their earned TREN tokens whenever they choose.
The Single Sided Liquidity Program offers 2x the liquidity offered by normal LPs. As an example, let's say a user has 500 of stablecoin A, and they want to create a liquidity pool of stablecoin A and B. If the user doesn't have any stablecoin B, then the user will need to sell half of their stablecoin A holdings to create a stablecoin A and B liquidity pool (assuming 50-50 LP balance), which leads to a total of $500 in liquidity (TVL).
Unlike the example above, when a user deposits 500 of stablecoin A, the SSL contract will mint 500 XY to pair with 500 stablecoin A, for a total of $1,000 in liquidity. Users also receive rewards based on this total liquidity.
Creating or adding to a liquidity pool typically takes numerous steps, with each step costing gas fees. Often times, particularly for smaller amounts of capital, the gas fee costs outweigh the rewards that a liquidity pool might offer. With SSL, users only need to take one step in depositing their stablecoin.
Single Sided Liquidity Providers receive yield in the form of TREN tokens. This TREN cannot be claimed until TREN TGE. Users can see the amount ofTREN tokens they will receive by inputting the number of stablecoins and length of time in the SSL Program through the front-end calculator.
TVL
APY
$1,000,000.00
208.57%
$1,500,000.00
139.05%
$2,000,000.00
104.29%
$2,500,000.00
83.43%
$3,000,000.00
69.52%
$3,500,000.00
59.59%
$4,000,000.00
52.14%
$4,500,000.00
46.35%
$5,000,000.00
41.71%
Participating in the Liquidity Generation Event (LGE) with Tren Finance offers contributors a secure and innovative approach to liquidity provisioning. While any blockchain activity carries inherent risks, Tren Finance has implemented robust measures to mitigate these risks and safeguard participant funds.
Tren Finance integrates third-party smart contracts to power its liquidity provisioning model, making their security crucial.
As the deposited stablecoins are paired in a liquidity pool with XY, there is impermanent loss risk. If XY appreciates against the deposited stablecoin, the user will receive more of the deposited stablecoin than was originally deposited. If XY depreciates against the deposited stablecoin, the user will receive less of the deposited stablecoin than was originally deposited, and instead receive additional XY instead. If XY is below peg, since XY is programmed to equal 1 USD in the smart contract, the user may receive back a lower market value than the original deposited stablecoin value amount.
Token value fluctuations can affect the liquidity pool's value and the returns of contributors.
The core SSL contracts developed by Tren Finance have been independently audited by Zokyo, a renowned blockchain security firm. This audit ensures the integrity, reliability, and security of the contracts underpinning our liquidity generation process. Additionally we leverage the trusted infrastructure of Gamma.xyz, whose smart contracts have undergone rigorous audits by leading blockchain security firms, including:
Zokyo: Read Audit
OpenZeppelin: Read Audit
ConsenSys Diligence: Read Audit
Arbitrary Execution: Read Audit
Tren Finance minimizes impermanent loss by providing XY for the LP position, optimizing the liquidity provisioning strategy and reducing risk exposure caused by token price fluctuations.
Our contracts are transparent and open-source, enabling ongoing community review. Additionally, our team monitors activity to detect and address potential vulnerabilities swiftly.
Aside from the benefits and reduced risks for users mentioned in the sections above, there is another key reason why we chose this approach:
The Single Sided Liquidity Program's overall goal can be viewed as peg stability for XY - generate enough liquidity for XY so that users can easily swap in and out of XY without significant slippage.
But there's another way in which the Liquidity Generation Event will help with XY peg stability -The Tren Finance team will also deposit an undisclosed amount of stablecoins into the Single Sided Liquidity Program to generate protocol-owned XY. This buffer of protocol-owned XY offers flexibility and a number of different strategies that the protocol can employ for peg stability purposes.
As an obvious example, when XY is above peg, the protocol can mint additional XY to restore peg. When XY is below peg, the minted XY can be burned so that the original stablecoin deposits are recovered. The original stablecoin deposits can then be used for peg defense purposes, and re-deposited into the SSL once peg restores. You can read more about how Tren Finance handles XY peg stability here. It will be difficult for the protocol to acquire XY through overcollateralized loans on the dApp, so the Liquidity Generation Event provides a perfect opportunity while bolstering XY liquidity at the same time.
As described in the XY page, there's one more way in which the SSL program helps with XY peg stability. The use of SSL contracts for XY liquidity provides even further peg stability mechanisms through Peg Stability Contracts. This abiliity to rebalance the liquidity pools in the AMMs for the SSL creates another buffer for long-term peg maintenance.
The Liquidity Generation Event is on Arbitrum
The following stablecoins are currently eligible:
USDT
USDC
Based on demand, we will look to expand the list of eligible stablecoins. We'll take a look at how each pool works below:
The USDT/XY liquidity pool is a Uniswap v3 pair, managed by Gamma. Relevant links can be found below:
The USDT/XY pair is a Curve liquidity pool using a standard Curve single sided deposit system. Relevant links can be found below:
Curve: https://curve.fi/#/arbitrum/pools/factory-stable-ng-115/deposit
