How To Participate in the SLD Liquidity Mining Program
The current Ethereum layer 1 derivative products have always faced several problems, preventing them from achieving the mainstream success and adoption that the crypto community wishes to see. One such limitation comes in the form of costly Ethereum gas fees, making it impossible for market makers to implement an orderbook based strategy. Another limitation comes in the form of delayed clearing, especially in the case of perpetuals, where timely clearing can be crucial.
We, at Shield, understand these problems and have come up with the first risk-free perpetual contract, bringing to you the next generation of global decentralized derivative infrastructure. A crucial component to this is our governance token, the SLD token, and how you can get rewarded for being an active member of the Shield Community. Here’s everything you need to know.
SLD token — The Necessary Details
To safeguard the operation of our product, the risk-free perpetual contract, we use a decentralized derivative protocol — consisting of traders, dual-liquidity pools, external liquidators, and brokers. The network aims to provide incentives for liquidity providers and liquidators through the native SLD token — achieving an optimal Nash Equilibrium, which does not require co-operation to maintain security and stability.
The SLD token, as mentioned earlier, will serve as a governance and incentive tool for the platform, and the total supply is fixed at 1 billion. A significant 50% of the total supply is reserved for mining incentives as rewards for liquidity providers and external liquidators. You can learn more about Shield’s token economics here. The dual-liquidity pool is one of the most creative solutions to ensure liquidity and allow LPs to customize their risk on liquidity mining. Before you participate in the liquidity mining program, Shield suggests you read here to fully understand how it works and find the mining solution that suits you most.
How To Participate in the SLD Liquidity Mining Program
To ensure liquidity, the SLD risk-free perpetual contract makes use of a dual liquidity pool model. Users can take part, by either participating in the public pool that incentivizes the junior tranche (LP-1), or private pool which powers the senior tranche of liquidity (LP-2), or .
Public Pool (LP 1)
What you provide: Stablecoins, such as DAI, USDT and USDC
What you receive: reTOKEN, corresponding to the token deposited — reDAI, reUSDT, and reUSDC. These reTOKENs can be redeemed for SLD tokens on a pro-rata basis.
The LP 1 (public pool) is open for everyone to deposit liquidity into the platform, and will only be used when there’s not enough liquidity when a taker opens a position.
When users deposit stablecoins into this liquidity pool, they receive a corresponding LP token. For instance, if you deposit DAI into the protocol, you will receive a corresponding reDAI which is calculated using the following formula:
reDAIreceived = (DAIdeposit * reDAIpre-deposit amount)/(DAIpre-deposit amount — DAIDeposit)
This reTOKEN will be an automatically generated ERC-20 token, that you can use to claim the mining rewards from the liquidity mining smart contract on a pro-rata basis.
Initially, the mining rewards in the backup pool would be 32 SLD per block (approximately 200,000 SLD per day). Due course of time, every time the distributed rewards reach 20% of the undistributed rewards, these rewards will be halved.
There is a 14 day lock up period for any new deposit in LP1.
Private Pool (LP 2)
The junior tranche of Liquidity, the LP-2 is designed for professional traders, who are experienced to hedge their positions. These rewards will be calculated once liquidity is locked for new positions. Needless to say, the higher risk taken on by the active miners take carry a higher reward which is (initially) calculated as follows
Amount of SLD = Transaction fee of the order*10%*0.05 SLD.
The SLD reward can be withdrawn at any time.
What you provide: Stablecoins such as DAI, USDT and USDC
What you receive: Funding fee and SLD based on the transaction fee of the order
The Shield risk-free perpetual contract is only just the beginning of what Shield aims to achieve in the decentralized derivatives world. You can learn more about what Shield aims to achieve in the Shield Whitepaper, along with other details on the risk-free perpetual contract.
We’re thrilled to share the testnet will go live soon and we welcome everyone to participate. Stay tuned and follow us on social media to get the latest information.
