Strategies
The core element of Cadabra for earning through liquidity provision.
Last updated
The core element of Cadabra for earning through liquidity provision.
Last updated
The passive yield from strategies is based on the emission of our utility token, ABRA, which is distributed as a reward for providing liquidity. The level of yield for a strategy depends on voting results — the more votes a strategy receives, the larger the share of ABRA emission is allocated for the strategy.
Strategies combine several underlying yield sources. Rewards collected from underlying protocols (UPR - Underlying Protocol Rewards) are distributed among users who voted. Voting results also determine how liquidity is rebalanced among the underlying protocols within a strategy.
Strategies follow the principle of "homogeneity" and group yield sources based on by assets of a similar nature. For example, a strategy may include stablecoins with the same risk profile or native network tokens and their liquid derivatives. Based on voting, a strategy rebalances invested funds to maintain a stable yield, as underlying protocols periodically change their APR. Consolidating similar assets or tokens helps mitigate fluctuations and provide a stable, high APR.
Technically, strategies are smart contracts that invest funds into underlying protocols on behalf of the user, while the user owns a share of the strategy’s liquidity through an LP token. Each strategy ensures at the smart contract level that funds can only be allocated to specific protocols. Adding new protocols to strategies occurs with a 3-7 days timelock, giving users time to decide whether to withdraw or keep their funds in the strategy.
Among the strategies available to users, special attention can be given to USDT/ABRA liquidity pools as yield sources.
Liquidity pools are needed to enable trading and asset swapping on decentralized exchanges, where users deposit their assets into a pool and receive rewards in the form of transaction fees and extra incentives.
USDT/ABRA liquidity pools are price-setting pools with stablecoins on the Uniswap v3 platform, using the full-range mode, making them similar to AMM liquidity pools.
The UPR (Underlying Protocol Rewards) comes from swap fees in these pools when users buy or sell ABRA.
