What is 1inch derivative staking, and how does it work?
Everything you need to know about 1inch derivative pools
This article covers:
Turbo is a new derivative protocol, powered by Opium protocol.
Put simply, these contracts are a way for traders on the Opium platform to enter a short-term, high leverage position while minimizing the downside risk of liquidation.
1inch derivative staking is a risk-mitigation solution for Opium's 1inch Turbo option contracts. It allows investors to deposit tokens into a 1inch liquidity pool that covers Opium's Turbo contracts during an event where the strike price is not met. Through this protocol, anyone who buys a Turbo option contract receives "insurance" against these unfavorable market conditions in return.
Historically, derivative staking pools have offered a stable return on deposited funds, which are generated from the selling of Turbos. In an event where the pool does not sell a sufficient amount of Turbos within the specific time period, the staker's deposited assets remain in the pool with no penalty or risk of liquidation.
1inch Derivative Staking Mechanics:
Currently, there are three Turbo staking pools on 1inch: Turbo 1INCH (Ethereum mainnet), Turbo ETH (Polygon), and ETH Dump Protection (Polygon).
Each staking pool has a 1-week life cycle which consists of 3 stages: Rebalancing, Active, and and Pending.
This is the first stage within the 1-week life cycle, and lasts for 4 hours. During the rebalancing stage, you can stake 1INCH tokens or withdraw them immediately. The strike price is determined at the very beginning of the rebalancing phase.
This is the second stage within the 1-week life cycle, and lasts for 44 hours (just under 2 days). During the Active stage, the price has time to move up or down in relation to the strike price. You will be able to monitor various metrics, such as the total amount of 1INCH staked in the pool, the strike price, the pool’s utilization % (higher utilization = higher APY). During the active stage, users can stake tokens in the pool, but not withdraw them.
This is the third and last stage within the pool’s lifecycle, and lasts just under 5 days. The Pending stage can be considered an "accounting phase", where payments to both Turbo buyers and Turbo pool stakers are calculated and distributed.
***Please note: Users are free to deposit or withdraw funds at any time; however, funds can only be scheduled to be staked or withdrawn during the "Pending" period. Once the "Pending" period ends, the tokens are automatically deposited into o withdrawn from the Turbo pool's staking contract.
The pool performance shows the historical success of the pool. The benchmark return is the original projected APR, which can be compared to the current APR in the metrics above.
A user deposits 100 1INCH into a derivative staking pool to cover the purchasing of Turbos. As compensation, they receive fees from the Turbo purchasers generated in a week in addition to retaining any weekly appreciation of 1INCH up to 3%, while all weekly appreciation above 3% goes to the Turbo purchasers.
If the pool does not sell any Turbos within a specific week, the deposited 1INCH will not be at market risk and will retain ALL price appreciation (even above 3%). By utilizing a 3% cap on weekly appreciation, profits from selling Turbos will reliably cover payouts to the Turbo purchasers, while effectively generating interest on crypto for the stakers.
How to stake (or schedule a stake) in a derivative pool:
First, you will need to connect your wallet. To do so, click "Connect" wallet in the upper right corner of the page.
Next, click on the "Earn" tab, and select "Strategies".
On the following page, click on Turbo 1inch. You will then be taken to the main Turbo staking dashboard. On the right hand side of the page, you will be able to select the amount of 1INCH tokens you would like to stake. Before staking, you might need to give permission (approval) to stake the 1INCH tokens.
Once permission / approval is granted, and the correct amounts are entered, click the "Scheduled stake" button (if currently in “Pending period), or the “Stake” button (if currently in “Rebalancing” or “Active” periods).
***Note: If you stake during the “Pending” period, your 1INCH tokens will be moved out of your wallet and into a temporary address until the "Rebalancing" period begins. At this time the tokens will be staked and no longer be held by the temporary contract address.
Once the stake has been scheduled, the tokens will no longer be available in your connected wallet. You can see the status of your pending stake in the lower left corner of the dashboard.
How to cancel a pending stake (requires gas fees)
If you scheduled a stake during the "Pending" period, it can be canceled at any time. To cancel, click on the "Cancel" button at the bottom left of the dashboard.
Then, adjust the gas fees to your preference, and click the "Cancel stake" button. Finally, sign the transaction in your wallet. Once it has been confirmed, your scheduled stake will be canceled.
How to withdraw (or schedule a withdraw during pending phase)
First, connect your wallet and navigate to the Turbo 1inch derivative pool dashboard.
On the right hand side, of the page you can view the details of your stake. Before withdrawing, you will need to give permission to the 1inch contract:
Once the approval is submitted, click the blue button to withdraw (or schedule if during pending phase). Prior to scheduling, you will be able to review the withdraw release date (if scheduled), fee, and transaction cost.
*** Please note: A fixed fee of 10LP will be applied to cover gas fees for scheduling
After clicking "Withdraw" or "Schedule withdraw", simply sign the transaction in your connected wallet to complete the process.
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