Profit-sharing on DeFi: Adamant Vaults
Autocompounding yield farms are a dime a dozen on the Ethereum and Polygon network. On Polygon there are likely hundreds of Goose forks at this point and the number is only growing. Very few autocompounding yield farms stand out from the rest. One does consistently impress me though, due to its unique tokenomics and long-term outlook: Adamant Vaults.
What is Adamant Vaults?
Adamant is an autocompounding yield farm that allows you to stake your liquity pool tokens that are rewarded by another DeFi protocol and autocompounds those into your original deposit. (Learn more about liquidity pools and rewards here.)
No more daily harvests of your rewards to sell them and deposit back in, or to trade them for something else. No more wasted gas and time.
Instead, your rewards are sold by Adamant and then deposited right back into your liquidity pool. The unique thing about Adamant? When you deposit there you not only get autocompounding rewards, but you start sharing in the profit from all other vaults on the site. Profit-sharing on DeFi: I’ll detail how below!
Why is Adamant different from other yield farms?
There are a couple of reasons I love Adamant and think it is a great place to deposit your LP tokens. 1. It is constantly adding new vaults and growing in total deposited value. 2. It allows you to autocompound your rewards for zero deposit fees (there is an early withdrawal fee on all vaults if you withdraw within three days of a deposit). 3. You get to share in Adamant’s profit from all other vaults on the site.
Adamant does so by sharing its performance fees with stakers of its native token: ADDY.
Higher APR through profit sharing
Let’s say you have some Qi and MAI from Mai.finance and are interested in farming the liquidity pool for those tokens. You deposit those at Quickswap in a pool and then can get rewarded for staking at Mai.finance (the Qi DAO incentives providing liquidity for that pool and MAI/USDC with their native governance token, Qi).
For doing so you’d gain around 400% APR, but if you do so at Adamant you earn almost double that.
How does Adamant manage to make nearly double the APR on your deposit? Each vault autocompounds rewards, but also is rewarded with the native token ADDY. The token is then used to share in Adamant’s performance fee dividends.
What’s a performance fee?
When you deposit to Adamant you are allowing the protocol to take your liquidity pool tokens and deposit them, as a group, to another protocol that will reward liquidity pool providers. Adamant then automatically harvests the rewards for these deposits, sells them on the market, and deposits those profits back into the liquidity pool deposit. When it does so Adamant applies a 30% performance fee to the profits and converts those to WMATIC. 30% may seem like a big loss of profit, until you realize that 100% of it goes to Addy stakers.
Adamant takes the performance fee from each vault (from the most stable to the most degenerate) and distributes that to users of the protocol that are vesting, staking, or have locked ADDY.
What is Addy and how do you earn it?
ADDY is the native token of Adamant. You earn ADDY by staking your liquidity pool tokens in a vault. For every 1 ETH of profit, Adamant creates and distributes 450 ADDY tokens to liquidity pool depositors. Those ADDY tokens can then be claimed and vested. Each vested ADDY earns you a certain APR of the profits from Adamant Vaults. Learn more about the tokenomics here.
When you first claim and vest ADDY you will need to wait at least 3-months to for its vesting period to end. Once it is fully vested you can sell it on the open market for its value at the time, stake it back at Adamant to continue sharing in the performance fee dividends, or lock it at Adamant to share in the performance fee dividend AND receive a certain percentage of ADDY rewards back for locking it.
At the time of writing the APR is 128.34% for the fee-sharing dividend and an additional 477.37% in ADDY when you lock. You can see a comparison of vesting, staked, and locked ADDY here.
How do you lock Addy?
Currently, you can lock ADDY as a single asset at Adamant for 3-months. Once that period is over you can withdraw it, and just like fully vested ADDY sell it on the market, stake it, or lock it again.
In addition to locking ADDY as a single token, you can also provide liquidity to the ADDY/WETH token pair at Quickswap, deposit it at Adamant, get rewards of more ADDY. Adamant allows you to lock that ADDY/WETH LP to boost your rewards. You can lock it anywhere from a week to 3 years for a boosted APR and voting rights.
Additional ADDY Rewards for Locking
When you lock ADDY you also receive additional rewards of ADDY. This ADDY reward comes from users that choose to withdraw their vesting ADDY early for a 50% penalty. When they do so the penalty is distributed to those that have staked and locked ADDY.
Many users choose to withdraw early, take the 50% penalty, and then lock their ADDY immediately since the tokenomics tend to favor that investment strategy. (You can usually make up the penalty in a couple of weeks when locking!)
How can I get started using Adamant?
I’ve got a write-up on how to swap tokens, deposit into a liquidity pool, and start autocompounding your deposits at Adamant here.
If you don’t know what pool to invest consider your risk-tolerance and strategy:
- Those looking for some high rewards and okay with a little risk can check out the ADDY/WETH pool from Adamant. You can also lock it for a boosted APR up to around 1500%.
- Risk-averse folks can check out the stablecoin pool with MAI/USDC from the Qi Dao.
- Don’t want. to bother with an LP deposit? To invest in the Adamant protocol overall buy some ADDY off the market and stake/lock it here.
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