TL;DR — Put succinctly, when single-sided staking goes live, you must withdraw liquidity from pairs containing HBAR and then provide that liquidity to the same pair to continue receiving farming rewards. Our website will do all the work routing that liquidity properly to our upgraded pools.
Below, we will elucidate the mechanisms of this transition, how easy it will be for you as a liquidity provider, and in what ways it will deliver the SaucerSwap protocol into a new era marked by increased user incentives via real yield.
Single-Sided Staking Recap
An Introduction to Single-Sided Staking on SaucerSwap outlines how SAUCE can be staked in the Infinity Pool in exchange for a receipt token called xSAUCE. There is no risk of impermanent loss with this type of liquidity provisioning since only one asset is involved.
The ratio of SAUCE / xSAUCE increases due to SAUCE buybacks from three distinct sources: swap fees from all pools, farm emissions, and HBAR native staking rewards. Here, users may redeem their xSAUCE for SAUCE at a higher exchange rate than when they deposited. In this regard, the mechanism functions similarly to Stader liquid staking, i.e., HBAR / HBARX.
xSAUCE is an essential component of the SaucerSwap ecosystem, as it will connect users with HTS projects via Community Pools.
WHBAR and Native Staking Explained
HBAR is not an HTS token — analogous to ETH vs. ERC-20 — so it must be wrapped to interact with the SaucerSwap contracts. This is achieved via a smart contract that stores incoming HBAR and mints wrapped HBAR. These WHBAR tokens are used to provide liquidity in SaucerSwap’s decentralized exchange. When liquidity is withdrawn, WHBAR tokens are sent back to the smart contract and burned, and an equal amount of HBAR is returned to the user.
With the introduction of native staking, the HBAR in this smart contract can be dynamically staked to a permissioned node to generate real yield for users. Since Hedera does not impose slashing or lockup periods, SaucerSwap users can withdraw liquidity instantaneously. The current amount of HBAR deposited in SaucerSwap’s WHBAR contract is over 130Gℏ (eq. to $7.8MM @ $0.06 per HBAR), which can generate significant yield for both xSAUCE holders and the DAO Treasury.
The native staking mechanics of the WHBAR contract are described in the above figure. Here, the WHBAR contract is deployed, setting the stakedAccountId to a simple smart contract. This StakeToSetter contract has an admin key to select a node for staking and allows its beneficiary to withdraw the accrued rewards. The WHBAR contract will not have an admin key and will therefore be completely decentralized.
Once daily, at a random time, an allocation of HBAR native staking rewards is pulled from an intermediary payment splitter contract. This HBAR is swapped for SAUCE in the BrewSaucer contract before being sent to the Infinity Pool. Since the ratio of SAUCE to xSAUCE in the pool increases, so does the relative value of xSAUCE.
What this means for you as a Liquidity Provider
Note: no immediate action is required; however, the information below outlines future steps you will need to take.
For SaucerSwap to take advantage of native staking rewards, a new WHBAR contract must be deployed. This deployment will cause minimal interruptions; however, it will require some user action.
All liquidity pools containing the existing WHBAR token will be deprecated, i.e., no longer used to route swaps; instead, upgraded pools containing the new WHBAR token will be used. Users will be able to withdraw liquidity from the deprecated pools at any time; however, they will no longer have the ability to provide liquidity to these deprecated pools through SaucerSwap’s website. Instead, the site will automatically direct all deposits to the upgraded pools.
The SaucerSwap team will create upgraded pools for all supported pairs (i.e., those with farms) to ensure a smooth user experience. The one-time fee associated with creating other pools will be lowered to $10 for one week following the migration, after which it will be set back to $50.
Therefore, we encourage all liquidity providers to do the following once directed by the SaucerSwap team:
- Identify if you are providing liquidity in a pool containing WHBAR — all existing pairs containing HBAR fall in this category (e.g., HBAR-SAUCE, HBAR-USDC, etc.).
- If you have LP tokens containing WHBAR, unstake those LP tokens on the farm page if applicable — these deprecated farms will be found in the “inactive” tab.
- Withdraw your liquidity for pairs containing WHBAR in the “My Pools” tab on the liquidity page.
- Provide liquidity to the same pair — for example, if you withdraw HBAR-SAUCE LP tokens, provide liquidity back to the HBAR-SAUCE pool. Our site will automatically route your liquidity to the upgraded pools.
- If applicable, stake those LP tokens in the new farm to receive HBAR and SAUCE emissions.
- Be mindful of the inverse relationship between APR and liquidity — those who stake first will receive a higher yield.
Note: If you have any questions about the above process, please reach out in the SaucerSwap Discord and a team member will assist you.
Once the new WHBAR contract is deployed, farm emissions to supported pools containing the current WHBAR will be set to zero. Afterwards, these farms will appear in the inactive tab of the farm page, as seen in the figure below.
A new farm will be created for each existing farm containing HBAR. The same token pairs will be incentivized (with the same farm weight). The only difference here is the use of the new WHBAR.
Summary
A new WHBAR contract will be deployed, coinciding with the release of single-sided staking in November. When this occurs, users are encouraged to withdraw liquidity from existing pools containing WHBAR and deposit it in upgraded pools to continue earning swap fees. If a deprecated pool has a corresponding yield farm, a new farm with an identical weight will be created for the upgraded pool. Our team will provide frequent updates as we approach this migration date, representing an exciting milestone for the SaucerSwap protocol.
