Yield Generation In the context of Takaturn 2.0
Last updated
Last updated
There are many YG protocols in the crypto space that can be used to generate yield, including but not limited to, , , etc. And generally speaking investors will search for the maximum yield they can generate with the lowest amount of risk.
The Takadao development community complies with and it is these principles that guide the entire community mindset as well as business model. As a result, it is not an easy task deploying participants/members dormant capital lying in the turn group smart contracts, because most widely available staking protocols fall short of Shariah requirements.
The alternative to generic staking protocols is a bespoke staking protocol. Takadao has employed the services of , a shariah compliant developer of bespoke staking smart contracts that provide ETH liquidity to decentralized exchanges. The ETH liquidity will be deployed into which has the effect of significantly reducing the possible impact of , which is one of the risks associated with YG.
Liquidity provisioning staking in usually carries certain risks, including but not limited to Impermanent Loss, , & .
There are 3 main reasons why our business model suggests exposure to ETH/CORRASSETs (eg or ) pairs. They are,
ETH Collateral security - The collateral used in the Takaturn solution is ETH and to convert this to any other digital currency and then back to ETH at the end of the turn group term will incur gas fees on any blockchain that we utilize. It is more efficient to maintain the status of the ETH as ETH and pair it, through a , with any other digital currency requiring similar rates of liquidity to trade on exchanges.
Systemic Risk - In the case of Takaturn 2.0 YG this refers to the risk associated with the failure of a system/ecosystem of any altcoin, including but not limited to stablecoins or any other coin. For example, the collapse of . Systemic Risk is generally higher for altcoins, including stablecoins. Based on these insights, Takadao has firstly decided to utilize ETH/CORRASSETs pairs when providing liquidity to liquidity pools and secondly spread the pairs across well capitalized and backed DEXs such as , and . Our YG protocol is built on the blockchain which is the on the network.
Impermanent Loss - this concept involves an and deals with the tradeoff relationship between owning a token outright (sitting in one’s wallet) or investing the same token into a liquidity pool, where it is paired with another token . And it involves price movements and the mechanisms that determine these price movements.
The risk of impermanent loss is minimized by dealing in correlated asset pairs (eg, ETH/wETH and ETH/sETH). This topic is dealt with in more detail in Appendix 3