TLDR: RAY depositors get all the benefits of supplying funds to the underlying protocols, including any liquidity incentives.
Compound recently changed their distribution model, adding “liquidity incentives”. Suppliers to Compound now earn both interest and COMP, Compound’s governance token. COMP has proved highly attractive, making the COMP portion of the yield very meaningful for liquidity suppliers.
We wanted to make it clear how RAY handles these incentives. RAY depositors get all the benefits of supplying funds to the underlying protocols, including any liquidity incentives.
RAY’s allocation models now account for the incremental yield generated by liquidity incentives. RAY adds the current value of the COMP earned by suppliers to its interest rate estimates, allocating to the highest overall yield. RAY will collect and sell that COMP via a DEX, adding it to the yield earned by RAY depositors. Initially this will happen weekly. We will later upgrade RAY contracts to happen more regularly.
Liquidity incentives seem here to stay. Market makers Curve and Balancer recently launched a similar program, and there are rumors that other prominent DeFi protocols will introduce similar programs. RAY will seamlessly determine the overall yield associated with your deposits, ensuring that your funds are always deposited with the highest yielding option.
We’ve made two other big changes: converting RAY tokens to the ERC-20 standard and reducing gas costs significantly. Next up: integrations with your favorite automated market makers, allowing you to earn both lending yield and trading fees simultaneously.
Join the conversation in the RAY Discord Channel!
Staked helps institutional investors reliably and securely compound their crypto by 5% — 100% annually through staking and lending. Staked runs validation nodes for proof-of-stake currencies and offers access to on- and off-chain lending options that provide an annualized yield of in-kind currency. Staked’s investors include Pantera Capital, Digital Currency Group, Coinbase Ventures, Winklevoss Capital, ParaFi Capital, Fabric Ventures, Global Brain, and other leading crypto investors.