DeFi on Cardano will enable users to earn yield on staked ADA 🚨 This article is 4 years old...
DeFi on Cardano will enable users to earn yield on staked ADA
2 min read
Updated: Jan. 21, 2021 at 4:06 pm UTC
Once Cardano’s Goguen era is launched, users will be able to earn additional yield on their ADA without having to unstake their funds. Liqwid Finance, a DeFi solution built on Cardano, will enable users to earn governance tokens by providing liquidity to the ADA market on Liqwid—all the while their tokens remain staked on the mainnet.
Goguen set to unlock vas new DeFi capabilities on Cardano
Most of the conversation focusing on Cardano’s upcoming Goguen era seems to be analyzing the steps needed to unlock the smart contract functionality. However, the concrete things Goguen will bring to the blockchain seem to be seldom, if ever, discussed.
Liqwid Finance, a DeFi project built on Cardano, highlighted some of the upcoming features Goguen will enable, giving the Cardano community a rare glimpse into what the future will look like on Cardano.
Namely, the project, which won the first prize on IOHK’s Wyoming Hackathon in October, said that they received a lot of inquiries from the Cardano community about their upcoming Liqwid tokens. The DeFi platform focuses on peer-to-peer lending and is set to launch governance tokens that will be distributed as rewards for users providing liquidity.
The company said that the tokens will launch through user distribution and yield farming contracts just as the first HFC event for Goguen unrolls in February.
Yield farming rewards on top of standard staking rewards
While many members of the Cardano community seemed excited for the opportunity to provide liquidity to lending markets on the blockchain, some seemed worried that liquidity pools would drain the ADA delegated to stake pool operators.
However, Liqwid quickly disproved these claims by revealing that users who want to supply liquidity to lending pools on their platforms won’t have to give up delegating their tokens to stake pools.
The token locking functionality released last year, when combined with other features of smart contracts on Cardano, will enable users to earn additional funds on top of the standard staking rewards they get for delegating. Providing liquidity to a lending pool, such as the ones offered by Liqwid Finance, will not affect the funds delegated to stake pools.
The company also revealed that Liqwid’s core developers are currently exploring the option of having a hardware wallet connection to its platform. This would enable users to hold their ADA in a hardware wallet such as Trezor or Ledger and still provide liquidity to any lending pool on Cardano.
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The TREZOR Model-T is a second-generation Bitcoin/Altcoin hardware wallet manufactured by SatoshiLabs.