The new earning feature allows users to gain enhanced yields by combining natively yield-earning assets and market-making yields.
Decentralized finance protocol Swaap Labs announces the launch of its yield-generating platform, Swaap Earn, introducing earning opportunities to users on the platform. According to the team statement, the new feature aims to enhance DeFi yields and enable liquidity providers to “enjoy improved yields”. This allows LPs to maximize their earnings while mitigating risk on the platform.
Built on the success of Swaap Maker, the platform’s market-making feature, Swaap Earn utilizes a novel supercharged liquidity system that allows users to top up returns even from natively yield-bearing tokens with market-making yield.
According to David Bouba, CEO and Co-founder of Swaap Labs, the latest earning feature aims to simplify and enhance the efficiency of earning products in the DeFi space. Speaking on Swaap Earn’s launch, Bouba stated:
“The beauty of Swaap Earn lies in its simplicity and efficiency. By marrying our cutting-edge market-making strategies with passive yield generation, we’re setting a new standard for liquidity utilization in the DeFi space.”
Creating simple strategies for maximum gains
Despite the massive growth of the yield-earning sector in DeFi, users normally struggle with complex strategies and risk management issues that make most of the platforms difficult to use, especially for new DeFi users. Additionally, issues such as poor strategy design and liquidation risks persist across yield-generating DeFi protocols.
The launch of Swaap Earn aims to minimize these challenges as well as increase the overall yield opportunities for liquidity providers on its platform. First, the platform provides a single-asset pool that supports instant token deposits and requires no position management. This strategy is 100% passive, requiring no extra effort from LPs to earn additional rewards. The protocol adjusts capital allocation to whitelisted protocols to increase returns in a trust-minimized way.
Secondly, LPs can also enjoy improved yield opportunities on their yield-bearing assets by taking advantage of the optimal asset allocation. On this protocol, assets are dynamically distributed across a set of pre-defined protocols. This allows users to select their preferred protocols to match the best yields with their risk tolerance. Strategies and allocation rules can be added by governance to ensure vaults are up-to-date with the latest yield-generation opportunities.
Enhancing efficiency in liquidity utilization
Apart from offering LPs high yields, Swaap Earn aims to be the simplest yield-earning protocol across the DeFi Space. The company prioritizes an easy-to-use UX/UI, making it easy for new DeFi users to start earning high yields without the complexity that DeFi platforms are associated with.
In addition, the platform also aims to solve the challenge of efficient liquidity utilization, which has hindered the growth of yield-bearing protocols. From liquidity fragmentation across the space to LPs earning lower fees due to revised fee structures by popular automated market makers (AMMs), finding suitable yields has become harder to find. The challenges affecting liquidity provision have piled up for the past half decade and Swaap Earn is targeting to solve these issues.
On the platform, deposited asset liquidity is directed to DAO-approved protocols and asset pools. The liquidity is then dynamically distributed among pre-approved options. This ensures optimal capital allocation based on market conditions and efficient collateral management on lending platforms. By optimally allocating the liquidity, LPs can maximize their returns while mitigating the liquidity risks.
To kick off the launch of Swaap Earn, several vaults are already in service, including Lido and AAVE. AAVE recently provided grant funding to Swaap Labs to support the development and growth of Swaap Earn.
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