Mining
Mining Frequently Asked Questions about Deri Protocol

What do I harvest for liquidity mining?

In general, it is essential to comprehend that liquidity providers are the counterparts of traders on Deri Protocol. When traders realize profits, they do so at the expense of liquidity provider's provided liquidity. When traders realize losses or are liquidated, liquidity providers realize profits at the expense of traders.
Moreover, the Deri ecosystem consistently rewards Liquidity providers with Yield paid in DERI token.
So specifically, there are two types of potential returns:

I. Yield of DERI token

The APY of each liquidity pool refers to this part of yield.
As a miner, you earn your DERI reward (APY), proportional to the dollar value and the time length (i.e. timed value) of your liquidity contribution. The reward is in DERI (reflected as Unclaimed DERI on the mining UI)

II. Base token Profit (with Market Risk)

You may also earn profits in the base token you added as liquidity (e.g. BUSD).
Your LSV/Mining PnL, which reflects your profits and losses, is an interplay of various fees paid & received, possible liquidations, profits and losses of the counterpart.
Specifically, there are certain and uncertain profits you may earn as a liquidity provider. For this part of profits, your liquidity (base token, e.g. BUSD) is exposed to market risk. All of the following certain and uncertain profits are paid in the Base token currency.
Certain Profits:
  1. 1.
    20% of the transaction fees paid by traders flow into the liquidity pool and are shared between the liquidity providers. (This percentage is the result of DIP2).
  2. 2.
    The funding fee is always paid by Perpetual Futures traders on the majority side to minority side. And since the pool including its liquidity provider is always on the minority side, it (the pool and its liquidity provider) always receives funding fees. This fee amount is dynamic and adjusts to the net position.
  3. 3.
    When the trader is liquidated, the remaining margin is shared between the liquidators and the liquidity providers. Up to a certain amount (e.g. 2000 USD), the remaining margin position is shared in half, whereby for larger margin positions, the LP's overall share increases, as the liquidators' profit is capped at a limit (e.g. 1000 USD).
Uncertain Profits:
  1. 1.
    An uncertain but possible, loss of a trader increases your LSV or Mining PnL.
Market Risk:
  1. 1.
    An uncertain but possible profit of a trader decreases your LSV or Mining PnL. To the extent that it can become negative. Nevertheless, the probability of market loss on Deri liquidity mining is much smaller than for e.g. that of Uniswap due to the protection of arbitrageurs. This uncertain, but possible loss is in your Base token currency
  2. 2.
    While liquidity providers are always on the minority side on perpetual futures pools (i.e. they earn funding fees), they can also be on the majority side on Everlasting Options pools (i.e. they pay funding fees). Therefore, if the liquidity providers take the long side, they pay funding fees to the short side. This possible loss is in your Base token currency

How is the APY of liquidity mining calculated & how can I verify it?

There are three fundamental factors that influence the displayed APY of a mining pool. These are:
  1. 1.
    since DERI both rises and falls in price against USD, price fluctuations also influence the displayed APY
  2. 2.
    The APY is generally dynamic, fundamentally influenced by how popular the pool is, the APY increases when liquidity decreases and decreases when liquidity increases.
  3. 3.
    3. Mining on Deri Protocol is based on the S2F principle (similar to Bitcoin), the number of total DERI's mined per week is decreasing over time. Please note that the mining phase is gonna take decades! For more information kindly check out our Tokenomics article
The APY of liquidity mining only includes the yield of DERI award, whereas the profit of the base token is not included. To verify the displayed APY of liquidity mining for a certain pool, you can refer to the following formula:
  1. 1.
    At t0, record "My Harvest in Current Epoch" as H0;
  2. 2.
    At t1, record "My Harvest in Current Epoch" as H1;
  3. 3.
    Calculate
    APY=PDERI(H1H0)Y(t1t0)LAPY=\frac{P_{DERI}(H_1-H_0)Y}{(t_1-t_0)L}
    , where
    PDERIP_{DERI}
    is the price of DERI, Y is one year's time, L is your liquidity contribution.
Please wait to have (t1-t0) long enough (e.g. 30 min) so that the estimation is close.

Is the liquidity mining on Deri pools risk-free?

No, it isn't. In general, it is essential to comprehend that liquidity providers are the counterparts of traders on Deri Protocol. When traders realize profits, they do so at the expense of liquidity provider's provided liquidity. When traders realize losses or are liquidated, liquidity providers realize profits at the expense of traders.
Since it is very rare that all traders' positions are covered by an equal number of long and short contracts, liquidity providers step in to cover the difference between long and short positions (net position) with their liquidity. Therefore Liquidity mining on Deri Pools is subject to market risk
However, please note that such market risk is different from the impermanent loss of spot exchanges (e.g. Uniswap or Sushiswap). First of all, the fact it is called "risk", instead of "loss", indicates that the mining PnL result could be negative but also positive (which depends on several factors such as funding & transaction fees, exceeding traders' profits & realizing them, etc.). Secondly, the probability of a negative result (a loss) on Deri liquidity mining pools is much smaller than that of typical spot exchanges due to the protection by arbitrageurs, although a certain market risk remains. You might think of liquidity mining on Deri as investing in a low-risk fund with potentially very high profit, whereas that risk-free liquidity mining is like depositing your money into a bank saving account.
Please refer to our whitepaper for further details regarding the protection by the arbitrage mechanism.

Since liquidity mining is not risk-free, can I hedge the market risk of my liquidity contribution?

Yes, it is possible. Actually, it's quite convenient for sophisticated liquidity providers to do so: Liquidity miners merely need to hedge the portion of the risk exposure associated with their liquidity contribution.
For example, if you contribute 1% of the pool TVL and currently, the risk exposure (i.e. the net position) of the pool is 10 BTC and -1000 ETH, then you just need to hedge the part of the risk exposure for your part, i.e. 0.1BTC and -10ETH.

Is the liquidity mining on SushiSwap, SushiSwap Onsen & PancakeSwap Deri risk-free?

No, it is not. Liquidity mining on SushiSwap, SushiSwap Onsen or PancakeSwap are subject to the risk of impermanent loss. Any resulting permanent loss caused by removing the liquidity is in the user's responsibility. Use only the listed pools on our website to add liquidity. Adding liquidity on empty pools directly over SushiSwap or PancakeSwap can cause a huge or total loss. Any resulting permanent loss caused by removing the liquidity is in the user's responsibility

When can I claim my DERIs?

You can claim your DERIs once the epoch ends. One epoch is equal to 8 hours. Please note that, in the first 30min after every epoch ends, you can’t claim since the engine has to process first. Afterward, you will be able to claim your harvest of the past 8 hours (plus whatever you have mined before but not claimed yet).

Do I have to claim my DERIs after the epoch ended?

No, you don't have to claim your Unclaimed DERIs. You can spare them and claim them at any time you wish, as long as the engine has finished processing(>30min after every epoch ends).

How to withdraw my liquidity in the retired pools?

The retired pools (including the premining pools and trading pools of V1) are removed from the main pages. You can find them here to withdraw your liquidity.

What are the smart contract addresses of Deri Liquidity Token (DLT)?

The DLT Token is available & active on the following networks with the following smart contract addresses: BSC: 0xa487bf43cf3b10dffc97a9a744cbb7036965d3b9 POLYGON: 0xadea18da0af0ab14900a5634eddf5a83513cdce0
Last modified 8d ago