Provide liquidity with mStable's Feeder Pools to earn swap fees & MTA rewards.
Feeder Pools are liquidity pools composed of 50% mUSD or mBTC and 50% another asset that shares the same peg. Users can access this liquidity to trade to or from mUSD or mBTC with any supported feeder asset.
Since these pools are separate from the pools of assets underlying mUSD or mBTC, adding new Feeder Pools doesn't impact the risk profile of the mStable assets. This allows any number of same-peg assets to be added to the protocol.
Feeder Pools introduce a new invariant optimized for 2-asset stablecoin AMMs that shows similar properties as Stableswap, but can be solved with a lower number of operations and are therefore more efficient.
Feeder pools offer a number of benefits to users by:
- Offering efficient trades between mUSD or mBTC and any number of other same-peg assets, giving users more ways to obtain mUSD or mBTC and more options for swapping back to other assets.
- Leveraging yield for users who deposit in Save by providing a source of demand for mUSD and mBTC within mStable but outside of the Save contract. This has the effect of increasing the APY for savers.
- Generating additional swap fees within the mUSD or mBTC pools through supporting trades from feeder assets to other assets within the main pool using mUSD or mBTC as an intermediary. These fees also flow back to savers.
As with mUSD and mBTC, Feeder Pools offer the ability for MTA Governors to enable a governance fee which directs a percentage of total pool revenue to the protocol.
When trading between mUSD or mBTC and feeder assets, the user interfaces in the mStable App the same as when minting or redeeming assets using the main mUSD or mBTC pools. Users can select the Swap page and select the asset pair that they wish to trade. Feeder Pools will be utilized in the background to facilitate these trades.
Note that swaps into mUSD or mBTC through Feeder Pools do not incur a swap fee, making them the most efficient place to trade these assets.
Users can provide liquidity to a Feeder Pool through the Pools page on the mStable App.
To provide liquidity, you can deposit by selecting any asset that is supported by the mStable platform and receiving LP tokens in exchange. You can choose whether to receive the LP tokens to your wallet where they could be deployed elsewhere in DeFi to generate yield or to have the LP tokens deposited directly into the mStable "Vault", where you can earn MTA rewards that vest over time.
All LP token holders will receive swap fees generated by that specific pool in proportion to their share in the liquidity pool.
An important difference between Feeder Pool LP tokens and mUSD or mBTC is that the LP tokens increase in value over time as fees accrue, rather than inflating in supply. This creates a new universe of composable yield tokens generated by mStable.
There are currently 6 Feeder Pools live:
In the future, there are plans to make Feeder Pools permissionless so anyone can create a new pool and provide liquidity.
By depositing Feeder Pool LP tokens in the Vault, users can earn MTA rewards in addition to the yield generated through providing liquidity. The Vault is used to measure who is providing liquidity and distribute MTA through a smart contract.
- 1/3 of MTA rewards are claimable immediately
- 2/3 of MTA rewards are streamed linearly after 26 weeks
- Liquidity providers can achieve a maximum boost of up to 3X depending on the amount of LP tokens deposited and the amount of staked MTA.
Some Feeder Pools Vaults support a second token, e.g. mUSD/RAI Feeder Pool Vault accrues additionally FLX if it is available in the Vault. The second reward is added by the partner and mStable does not control the number of tokens or if any secondary tokens are distributed.
- Tokens are not vested and claimable immediately
- Tokens are claimed when claiming MTA