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FAQ for Liquid Farming

What is Liquid Farming?

  • Liberate LP positions by tokenizing it
  • Auto-compounds rewards and can be IBC-transferred to be used as collateral in other DeFi
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Why Liquid Farming is necessary?

  • Composability - interoperability of DeFi protocols - is the core basis of DeFi and LF token is one example how protocols in Cosmos ecosystems can run interchangeably
  • Users can mint interest-bearing tokens from their farming position while utilizing liquidity on other protocols such as lending

Usecase of Liquid Farming tokens?

  • Collaterals in Lending protocols (under negotiating with Umee)
  • Supporting stablecoin vaults with stablecoin pairs
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How Liquid Farming works?

  • Governance decide which tokens pairs support LF minting
  • Any users can deposit and mint LF tokens
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Why auction is used, not just swap of the rewards to get pool coins from the rewards?
Crescent Liquid Farming uses auctions to exchange the rewards coins to pool coins. Another way is to use swap and deposit. In details, the following steps can be used:
  1. 1.
    Swap a part of rewards to Coin A
  2. 2.
    Swap a part of rewards to Coin B
  3. 3.
    Deposit (Coin A, Coin B) to the pool, then the user gets pool coins
In the above step 3, the deposit ratio should fit to the pool reserve. For this, the ratio of the parts in the step 1 and step 2 should be calculated first considering the reserve ratio. For using swap, it can be difficult to exchange when the proper swap market of the coin pair does not exist and the swap amount is too large that can results in large slippage. Therefore, in order to generalize the rewards exchange to the pool coin, Crescent utilizes the auction participants.
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What is the fee rate and how the collected fee will be used?

  • At the end of an auction, the winning bidder and the rewards are decided. Then, the rewards except fee according to the fee rate is sent to the winning bidder while the fee is sent to feeCollector.
  • This fee collected can be used later by governance.