LP Rewards: The Most Overlooked Way to Get Your Hands on LOAN Token

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By Connor
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LP REWARDS CONCLUDED ON JANUARY 12th, 2024!!!

The Liquid Loans Protocol is LIVE on Mainnet!!!

And the LP Rewards is distributing LOAN token by the second!

To learn what the LP Rewards Program is, keep reading.

If you're ready to earn rewards now, then learn how to provide liquidity with this guide.

What is the Liquid Loans LP Rewards?

Starting at the moment of launch, the Liquid Loans LP Rewards program will run for 42 days.

The program is for users who provide liquidity on the PLS:USDL pair on PulseX.

These users can take their LP tokens from PulseX and deposit them into a smart contract on the Liquid Loans dApp.

As a reward, the liquidity providers will receive LOAN Token emissions in proportion to their share of the pool.

After 42 days, this opportunity will never arise again.

What is the Purpose of the LP Rewards Program?

The purpose of the LP Rewards program is to incentivize users to create thick liquidity pools for USDL:PLS. 

USDL is a fully-backed, algorithmic stablecoin, native to PulseChain. It is created by an immutable product with no admin keys and a decentralized oracle service. 

Therefore, USDL is the best option as the primary liquidity source for PLS. Unfortunately, however, the primary liquidity sources for PLS are highly centralized, fiat-backed stablecoin.

At the time of writing this, roughly 90 days from PulseChain launch, the major sources of liquidity are:

  1. DAI from Ethereum ($15.7M). Here are major risks involved with Dai:
  • Bridge Risk. Since DAI from Ethereum is bridged in via the PulseChain Bridge, if the bridge fails, so does the stablecoin
  • Collateral Risk. DAI on Ethereum is highly centralized because its collateral is centralized. It is backed primarily by USDC, GUSD, USDP, and “Real-World Assets”. All of these collateral sources rely on a central issuer/party to manage it.
  1. USDC from Ethereum ($5.6M). Here are the major risks involved with USDC:
  • Collateral Risk. USDC is issued by Circle, whose collateral for the stablecoin is held by Blackrock. The future redeemability of USDC for $1 is reliant on the collateral not being lost by the issuer.
  • Censorship Risk. Circle has censored individual USDC coins associated with certain addresses they did not like (essentially robbing the holders). If Circle wanted to censor all of the tokens in the PulseChain Bridge, they could.
  1. USDT from Ethereum ($6.2M). Here are the major risks involved with USDT:
  • Collateral Risk. USDT has a central issuer just like USDC. The future redeemability of USDT for $1 depends on the integrity of the central issuer. USDT has been suspected of being fractionally reserved for many years, however, it has stood the test of time. Regardless, the risk still remains. 
  • Censorship Risk. Just like USDT, the central issuer has admin keys which can invalidate/blacklist any coins that they want to, including all of those in the PulseChain Bridge.

For the future health of PulseChain, the primary liquidity pair should be a truly-decentralized stablecoin which has no risk of losing its collateral source, or censoring tokens. 

The Bottom Line

The LP Rewards Program is a great opportunity to secure some Loan Token.

To participate, you will need both USDL and PLS, in equal dollar amounts.

You will also need an understanding of how to provide liquidity on PulseX.

We suggest that you practice first on Testnet v4 for anything that you plan to do on mainnet.

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Disclaimer:Please note that nothing on this website constitutes financial advice. Whilst every effort has been made to ensure that the information provided on this website is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we strongly recommend you consult a qualified professional who should take into account your specific investment objectives, financial situation and individual needs.

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Connor

Connor is a US-based digital marketer and writer. He has a diverse military and academic background, but developed a passion over the years for blockchain and DeFi because of their potential to provide censorship resistance and financial freedom. Connor is dedicated to educating and inspiring others in the space, and is an active member and investor in the Ethereum, Hex, and PulseChain communities.

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