Last week Swingby quietly launched a new yield farming contract that provides additional rewards to Skybridge liquidity providers! By staking BTC, WBTC and/or BTC.B to skybridge, and locking your LP tokens (sbBTC) into our yield farming contracts, you can earn around 8%+ in Bitcoins and 10%+ in Swingby tokens.
Helping to improve the network
The sbBTC yield farming contract is more than just a liquidity incentive. It helps to improve the capacity and volume of the bridge by incentivizing the float to remain equally balanced.
Skybridge works by maintaining a set of liquidity pools that exist on different chains. When a BTC to WBTC swap is processed, the BTC funds enter the Bitcoin liquidity pool and the WBTC tokens are released from the Ethereum WBTC liquidity pool.
This model is unique to Swingby and allows us to support existing wrapped Bitcoin tokens such as WBTC, which is the most popular and widely supported wrapped Bitcoin token. Other chains tend to operate using the “mint-and-burn” model, such as Ren.
However, the drawback of the liquidity pool model is that swaps can only be processed as long as there is sufficient liquidity on both sides of the pool (“the float”). If users are swapping more BTC to WBTC, then it may cause a problem if Skybridge runs out of WBTC liquidity. In this case, only WBTC to BTC swaps will be available.
Dynamic reward APR
The new yield farming contract aims to solve the liquidity pool issue by offering a dynamic APR that is based on Skybridges float. If the float is unabalanced (i.e more BTC that WBTC), the yield farming APR will be normal, but if the float is balanced (i.e BTC is equal to WBTC) then the APR will be much higher. This interesting mechanic will help to incentivize network participants to add liquidity to the unbalanced side of the bridge.
How to use it
First, head to the Skybridge pool page in order to add BTC or WBTC to Skybridge as liquidity. Once you have done that, sbBTC tokens will be sent to your Ethereum address in exchange.
Next, take those sbBTC tokens and head to Swingby yield farming page and deposit the tokens into the “Skyrbidge (Ethereum)” farming contract.