Spot (beta live)
Derivatives (soon)
Contracts specification
Platform
Links
🌊
USDC Staking
Adequate liquidity is an essential element of any exchange. On platforms using the AMM model, there is no need for market makers. However, market-maker services are vital for exchanges operating on the basis of the order book model to maintain sufficient liquidity, spreads and fair pricing in the order books of trading pairs.
Typically, market makers need to have a lot of capital to work effectively, and regular users cannot make money on market-making due to requirements of complex software.
Spin offers both groups of protocol users a USDC staking pool solution. Any Spin user can invest USDC in the staking pool and these funds will be used by trusted market makers. For being engaged in this activity, lenders receive SPIN tokens as an incentive, and market makers receive sufficient liquidity to ensure spreads and fair pricing.
Market makers determine how much borrowed funds they will use within the limits specified for them. The funds from the USDC staking pool used by market makers are added to the collateral (margin) available for trades and at the same time are recorded as debt to the protocol.
Note that funds used by market makers can be lost due to their activities. If the borrower does not repay the debt, then the losses are distributed among all the stakers proportionally.
Governance sets the rate of return (as a percentage per annum) that borrowers pay in the USDC staking pool for the use of funds. Initially, this rate is 0%. It is possible to link the rate to a benchmark from an oracle, such as a floating rate of return USDC loan protocol on Solana or other blockchains.
Lenders
Any user can invest USDC in the staking pool. Staking rewards are based on the total USDC in the pool and are distributed in proportion to the users' stake. User funds can be invested in staking at any time while the rewards will be calculated from the moment of investment. Please see below the explanation of the outcomes with a different withdrawal time sent request:
- 1.If the user sent a request to withdraw funds from the staking pool earlier than 7 days before the end of the epoch:
- 1.Their USDC will become available for withdrawal after the end of the next epoch.
- 2.Rewards will continue to accumulate until the end of the next epoch.
- 2.If the user sent a request for withdrawal later than 7 days before the end of the epoch:
- 1.Their USDC will become available for withdrawal after the end of the current epoch.
- 2.Rewards will continue to accumulate until the end of the current epoch.
Borrowers
By the decision of the Governance, a market maker can obtain permission to use the funds contained in the USDC staking pool, if they meet the following criteria:
- 1.Are eligible for market-maker incentive rewards in the next era (maker user volumes in this epoch are higher than 1% of the total maker volumes for this instrument);
- 2.Market maker applied for funds usage on the Spin forum in a certain form;
- 3.DAO executed a proposal to include a market maker in the list of those who have the right to use the pool;
- 4.This proposal was elected by voting;
- 5.DAO successfully voted for the share of the USDC pool available for the market maker (no more than 40%);
- 6.The market maker passed the KYC procedure successfully.
The borrower of funds may be liquidated if his margin ratio falls below 0.7. In this case, the first-hand lender is the USDC staking pool, and the borrower is deprived of the right to use the borrowed funds until the margin ratio returns to level 1 and a separate Governance decision on the return of the borrower to the list of market makers eligible for the usage of USDC staking pool funds. The borrower himself determines the amount of funds he will use from the USDC staking pool within the allocation set by the Governance.
Governance of the protocol can regulate the following parameters: adding and removing new borrowers, changing the allocation for borrowers, the period before the end of the epoch for which the staker is obliged to apply for a withdrawal. By decision of the Governance, any borrower may be deprived of the right to use the staking pool funds.