Written By
Preston Van Loon
Contributor

Earn 64% APY Farming with TCAP Index

April 26, 2021

Disclaimer: This is not financial advice. This is an educational resource that should never be interpreted as a recommendation to buy any digital assets mentioned or an endorsement of Cryptex. Please do your own research.

Today's guest post was written by the CoFounder of Cryptex and CoFounder of Prsymatic Labs--Preston Van Loon.

The Alpha Leak

Yield Farm CTX with Zapper and Cryptex
Earn CTX governance tokens for providing liquidity to 2 pools in Cryptex protocol

Earn up CTX rewards up to 436% APY (now 320%) as a liquidity provider for CTX/ETH or up to 105% APY (now 64%) with TCAP/ETH

Introducing TCAP, The World’s First Total Crypto Market Cap Token

TCAP is a fully decentralized ERC-20 compatible smart contract that tokenizes real-time Total Market Capitalization from all cryptocurrencies and tokens listed on the largest crypto data providers in the world.

The TCAP token was developed by Cryptex Finance to provide a unique product for investors to gain exposure to the entire cryptocurrency market. Think of TCAP as the “S&P of Crypto”. That is to say, buying a TCAP token is similar to buying into an index of the broader market. Investors now have an option to gain exposure to thousands of cryptocurrencies without the risk associated with any one of those particular currencies.

CTX has an initial supply of 10,000,000 tokens. Any CTX allocated to the Founders, Advisors, and Treasury are distributed via a multi-year vesting contract. Any Initial Protocol Incentives are distributed via CTX Rewards Issuance & Vesting.

As time goes on, it may be in the best interest of the project and/or community to allocate and mint new CTX tokens. The creation of new CTX tokens via governance vote will be subject to a 2% per year maximum adjustment. That is, the max supply of CTX tokens cannot increase more than 2% in a given 1 year time span. Minting new CTX tokens may be used for compensation of black swan events that leaves TCAP vaults undercollateralized, continued incentives for product development, and other solutions that further advance the protocol.

How TCAP Works

The TCAP token has a true price provided by Chainlink oracles. This price is derived by the medium value for the total market capitalization of all cryptocurrencies. Then the total market capitalization is divided by the protocol divisor of $10 billion to give the token price of TCAP. For example, if the total market cap is $2 trillion, the TCAP price would be $200.

TCAP tokens are back by ETH or DAI in an over-collateralized vault. Anyone can mint TCAP at its true oracle price by adding sufficient collateral to maintain at least 200% value backing the minted TCAP.

Length of the Rewards Program

In order to minimize the initial volatility of CTX due to new issuance from community rewards, newly rewarded CTX tokens shall be subjected to a vesting period of 6 months where 30% of the reward is immediately available while the remaining 70% reward will not be accessible until 6 months vesting period has passed.

The current liquidity rewards program lasts 6 months and is expected to end in Mid-October 2021. However, Cryptex has mentioned that there will be additional incentivized pools, which have yet to be announced.

Fees

There are no fees involved in this tutorial other than Ethereum network gas fees paid to miners. You can reduce gas fees paid by selecting a Gas Setting in Zapper and by referring to gasnow.org when manually setting the gas price on the Cryptex app.

However, for those who might mint TCAP tokens in the future, there is a flat rate burn fee of 1%, payable in ETH, that goes to the CTX treasury. See below for a few other fees to consider if one ever wishes to mint TCAP with ETH or DAI.

  • Initial TCAP Mint Fee: $0
  • Initial TCAP Burn Fee: 1%
  • Initial TCAP Liquidation Penalty (for TCAP vault owners): 10%
  • Minimum Collateralization Ratio (for TCAP vault owners): 200%

Risks

As a liquidity provider in either pool, you are exposed to smart contract risk in Cryptex and SushiSwap but you can mitigate that risk by buying cover for SushiSwap, from the likes of Nexus Mutual or pay-as-you-go DeFi insurance by Armor. Being a liquidity provider for TCAP/ETH or CTX/ETH can result in impermanent loss, leaving you with different amounts of TCAP or CTX and ETH than what was deposited initially into the SushiSwap liquidity pool (LP). A liquidity crisis could result from an LP withdrawing a massive amount of liquidity from either pool. Another risk to consider would be if Chainlink oracles fail to provide a true price for the total crypto market cap.

How to Earn CTX as a Liquidity Provider

There are two incentivized pools for CTX farming. You may need TCAP, CTX, or ETH to join as a liquidity provider for either pool, but remember that Zapper allows you to start with any token when adding liquidity on Zapper Pools and Zapper will swap your single token to the 50/50 ratio of the pool tokens.

  1. First, decide which pool(s) one would like to participate in: TCAP/ETH or CTX/ETH. Refer to the Cryptex Farming page for the most updated estimated APYs.
  2. Add liquidity from the Zapper Pool page. Search for TCAP to find the TCAP/ETH pool or CTX to find the CTX/ETH pool and click Invest. If you're adding liquidity with a token other than ETH, you'll be prompted to first Approve before a second transaction to Confirm adding it as liquidity. You can start with any token (TCAP, CTX, ETH, or any other) and Zapper will swap it to the 50/50 underlying tokens.
  3. If you should want TCAP or CTX before adding liquidity, go to Zapper Exchange where you can swap any token for TCAP or CTX.
  4. Return to the Cryptex app to stake the SushiSwap liquidity provider (LP) token for either the TCAP/ETH pool or the CTX/ETH pool.
  5. Click Stake and then you'll be prompted with Infinity Approve to give permission to spend the LP tokens and deposit them into Cryptex.
  6. In the cryptex app farm page, click “Stake” again after the approval transaction above has been completed. Then choose the amount of LP tokens you’d like to stake for CTX rewards.
  7. Now you’re earning CTX Rewards! The unlocked rewards can be claimed at any time, while the locked rewards have a date set for when they can be withdrawn. A reminder that CTX rewards shall be subject to a vesting period of 6 months, where 30% of the reward is immediately available while the remaining 70% reward will not be accessible until 6 months vesting period has been reached.
Add liquidity to SushiSwap with Zapper
Add liquidity with any token using Zapper

That's all you need to know! Here's a number of helpful resources to get you started.

Get started as a liquidity provider!
Add liquidity to the TCAP / ETH pool

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