With the launch of our Degenbox, Abracadabra can now enhance the yield on interest-bearing collaterals on all the chains it is on!

Let’s see how this applies to our Liquity USD (LUSD) strategy!

The Strategy

Let’s dive into our Degenbox LUSD Strategy on Ethereum, how it works and how our users can benefit from it! Before starting, make sure to read how Abracadabra Lending Markets and Leveraged Positions work here.

Step 1: The Cauldrons

Users join the LUSD Market (either by simply depositing LUSD as collateral or by leveraging their LUSD positions). No matter what they choose, as long as they have a deposited LUSD balance, they will receive rewards from the strategy!

Step 2: Degenbox

As the LUSD cauldron is built on top of Degenbox, Abracadabra can use the user’s deposited LUSD to produce yields. For this strategy, we are depositing the LUSD into Liquity’s Stability Pool contract, and farm the ETH collateral that backs LUSD with it!

If you wanna read more on how the LUSD Stability Pool works, please find it here.

Additionally, depositing LUSD into the pool also allows Degenbox to farm LQTY tokens.
If you wanna read more about the farming process of LQTY you can find it here.

Step 3: Distributing Rewards

Every time the rewards are harvested, both ETH and LQTY are sold for more LUSD which are deposited back into the position. Note that as of 30/09, the 80% cut taken as a management fee has been reduced to 0%. In the upcoming weeks, the interest rate will be raised to 4.5%.

(Please note that this management fee and interest rate will be managed actively, in order to ensure that the end APY for the user is in line with the best options on the market!)

The obtained LUSD are then redistributed to every Abracadabra user of the cauldron, proportionally to their deposited amount! If you are a user of this cauldron, you will be able to see your deposited balance increase every time a harvest is called.

Withdrawing LUSD tokens

Our strategies keep approximately 95% of the LUSD in Stability Pool farming contracts, and 5% in Degenbox to allow users to withdraw smoothly! As a consequence, the withdrawable  amount is limited.

Once this limit approaches zero, new LUSD are unstaked and withdrawals are again available! You can check the amount Available to be withdrawn in the “My Open Position” box, under “Withdrawable Amount”.

And just like that, our LUSD degenbox strategy is now live!

If you have any questions or concerns, join our Discord community here.