Liquidity Staking Dapp Now Deployed to Mute
March 19, 2021
Liquidity staking has been a popular option for DeFi users keen to support their favorite projects on AMMs such as Uniswap. These decentralized exchanges require liquidity to offer an attractive trading environment, so to help projects sustain good growth with low slippage, this liquidity needs to be constantly added as the project gets larger.
Users are encouraged to provide some liquidity on the Uniswap pairing by depositing MUTE + ETH (of equivalent value) into the official Uniswap LP (liquidity pool). Once this has been completed, users will in return receive pro-rata 'UNI-V2' LP tokens which can then be staked through the new liquidity staking dapp on Mute.io. This dapp allows users to see what the 7-day and 30-day average APY is before depositing LP tokens, and keeps track of total rewards paid out to the user.
How to start staking MUTE or VOICE?
To clarify, we don't have plain old staking for the MUTE or VOICE tokens themselves - it's better to encourage a more tangible participation in the network to see rewards especially with the non-inflationary supply mechanics. Instead we have liquidity staking, which involves a 2-stage process:
1) Supply an equal value of ETH and either MUTE or VOICE to the relevant liquidity pool on Uniswap
2) After this, you can connect wallet to the liquidity staking dapp on mute.io and deposit your UNI-V2 LP tokens to stake (N.B.: gas is required for this transaction).
Please note - although you can provide liquidity at Uniswap on the following links, staking your LP tokens isn't available until the 'Deposit' button is activated on the dapp, likely around March 26-27.
Direct links for adding liquidity to Uniswap:
What happens next as the dock is preparing for launch?
1. Contracts upgrading for both MUTE & VOICE (including some changes that are in preparation for the DAO going live)
2. Deploy new vault contracts (these store the 1% tx fees) and redirect 1% fees for MUTE and VOICE to these new contracts.
3. Deploy new geyser contracts (LP staking contract) and issue new bootstrap round of tokens & vesting period
4. Connect with site front-end & announce 'Deposit' button is live
How are these liquidity staking incentives funded?
Neither of the dual tokens on Mutes ecosystem (MUTE/VOICE) have inflationary supply, meaning funding for liquidity staking incentives needs to be sourced from somewhere. Some projects have a very low circulating supply with a much larger total/max supply, meaning that over time if you're not actively participating in staking, then you actually lose value. This is because your share of the network is getting diluted in line with the increasing circulating supply from new coins coming onto the market (while also introducing additional sell pressure). We think this method can be improved upon by keeping the circulating/total supply steady and implementing an alternative mechanism.
● Mute approaches this from a different angle and instead takes a 1% fee from all transactions that occur - that is, all apart from anyone buying direct from the Uniswap contract.
● The fee is just enough to fund the incentives but not large enough to cause holders a serious hit (unless they decide to continuously move their coins between wallets for some reason).
● This 1% fee can be changed (for both tokens) via the Voice Control DAO governance should the community agree to increase or decrease this figure.
This distribution to liquidity providers not only helps protect against impermanent loss, providing additional incentive for providing liquidity outside of standard Uniswap fees, but also ensures the network is compensated by entities such as scalpers and front running bots trying to siphon value out of the ecosystem. That can't be helped in the current state of L1 trading, but we can ensure that good actors get some compensation from the bad actors.
The MuteVault contract incrementally fills up each time a qualifying transaction is performed and then once this reaches the threshold of 10,000 MUTE, the next transaction triggers the contract to 'burst' and pay out into the liquidity staking dapp. This increases the APY each time it triggers with providers who have been staking for 60 days or more receiving the full 3x multiple. The same is being duplicated on the VOICE side, so there will also be a VoiceVault contract deployed that collects and redirects these 1% transaction fees.
Added benefit of ever increasing locked liquidity
With a nod to the L1 transaction fee, liquidity providers themselves also contribute 1% when exiting the LP part of the ecosystem. This 1% LP fee is then sent directly to the LP pool and is therefore locked forever, meaning there is an ever increasing liquidity lock and therefore, an ever increasing price floor for each token. For anyone curious to see how much liquidity has been locked permanently, you can see this increasing over time on our analytics site at portal.mute.io.