⇆ Exchange
Introduction
In the latest wave of DeFi protocols, we’ve seen numerous platforms emerge that allow users to stake their funds in return for the protocol’s tokens. We’ll take a look at SteakHouse – a decentralized protocol built on Polygon/Matic network
The SteakHouse Finance
SteakHouse Swap uses an automated market maker (AMM) model. That means that while you can trade digital assets on the platform, there isn’t an order book where you’re matched with someone else. Instead, you trade against a liquidity pool.
Those pools are filled with other users’ funds. They deposit them into the pool, receiving liquidity provider tokens (or LP) in return. They can use those tokens to reclaim their share, plus a portion of the trading fees.
Token swaps on SteakHouse Swap are a simple way to trade one ERC-20 token for another via automated liquidity pools.
The liquidity provided to the exchange comes from Liquidity Providers ("LPs") who stake their tokens in "Pools". In exchange, they get LP tokens, which can also be staked to earn STEAK tokens in the "farm".
When you make a token swap (trade) on the exchange you will pay a 0.6%, which is broken down as follows:
0.3% - Returned to liquidity pools in the form of a fee reward for liquidity providers
0.3% - Sent to the SteakHouse Swap Treasury
Using SteakHouse Swap exchange
You’ll notice if you visit SteakHouse.finance that many features are inaccessible until you click on Unlock Wallet. Click on it, and you’ll be met with a few options: MetaMask, Trust Wallet, and other options. Once you’ve got connect, you can add liquidity. Again, if you’ve used any AMM previously, then you know the drill.
Go to the exchange page
Hit "Connect Wallet" button
Select the tokens you wish to trade and enter the amount
Check the details, and click “Swap”
Check the details and click “Confirm Swap”
Confirm the transaction in your wallet
Done!
Liquidity Pools
SteakHouse Swap pools allow you to provide liquidity by adding your tokens to liquidity pools or “LV1”.
When you add your token to a liquidity pool (LP), you will receive LV1 tokens (STEAK Liquidity Provider). You’ll find these LV1 tokens in several flavors – if you added, say, WETH and USDC to the pool, you’ll receive WETH-USDC LV1 tokens in return. DAI and USDT? You’ll get DAI-USDT LV1 tokens.
The number of LV1 tokens you receive represents your portion for example of the WETH-USDC liquidity pool. You can also redeem your funds at any time by removing your liquidity.
Providing liquidity is not without risk, as you may be exposed to impermanent loss. “Simply put, impermanent loss is the difference between holding tokens in an AMM and holding them in your wallet.” - Nate Hindman
It’s not all bad for liquidity providers as you will also be given a reward in the form of trading fees. Whenever someone trades SteakHouse Swap, the trader pays a 0.6% fee, of which 0.3% is added to the liquidity pool of the swap pair they traded on.
To make being a liquidity provider even more worth your while, you can also put your LP tokens to work whipping up some fresh yield on the STEAK farms, while still earning your 0.3% trading fee reward.
Adding Liquidity
Go to the exchange page and click “Pool” and then “Add Liquidity”
Select the tokens to add, in this case STEAK and USDC. You need to provide them in a 50/50 ratio vs USD value. For example, you would need to add $10 of STEAK and $10 of USDC. Once you are done, click “Supply”
Check the details, click “Confirm Supply” and then confirm the transaction in your wallet
You now have liquidity tokens. Now go to STEAK tab at SteakHouse
Click "Approve Contract“on the farm STEAK-USDC LV1 and after that will appear button "Stake LP"
Click the “Stake LP” button to stake your liquidity tokens
Enter the number of liquidity tokens you want to stake and click “Confirm”
Done!
So, in short, you can trade ERC-20 tokens, or add liquidity and earn rewards. There are also other features we’ll cover later.
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