In this article, we explain the interest of being a SLP with Angle

• Standard Liquidity Providers earn yield on their deposits like “standard” lenders on Compound or Aave

• Angle is a stablecoin protocol but it uses strategies like Yearn to accumulate yield on its collateral

• Thanks to that and thanks to a multiplier effect on the protocol’s reserves, SLPs can get a higher yield with Angle than on other platforms

• SLPs also earn a portion of the fraction fees paid by users minting and burning with no risk of impermanent loss

• sanTokens can be staked to earn ANGLE governance tokens

As a reward for depositing collateral in the protocol, SLPs can get a significantly higher yield than on other traditional platforms. We call this the multiplier effect. The multiplier effect comes from the fact that the protocol invest funds from users, SLPs, and HAs into yield-earning strategies, but the earnings are shared only between SLPs and the protocol.

For example, let’s say that the protocol has 150 USDC in total with 20 coming from SLPs. If the share of interests distributed to SLPs is at 60% (the rest goes to the protocol’s surplus), and the protocol invests 80% of its funds at a 10% APY, SLPs would receive 80% 150 10% * 60% = 7.2 USDC, or a real yield of 36% on a strategy at 10%.

Here, they earn a nice x3.6 multiplier on their investment, compared to what they would have earned by investing in the same strategy themselves or through another protocol like Yearn.

To be able to access such strategies with a 10% APY, the protocol has forked some of Yearn strategies trying to optimize for the best yield between Compound and Aave but it has the logic to accept new and more evolved yield-farming strategies.

On top of the yield from strategies, SLPs get a fraction of the transaction fees paid by users minting and burning stablecoins, like a Uniswap or SushiSwap LP would get. The main difference here is that there is no impermanent loss for being a SLP at Angle and no need to bring two assets to become a SLP. The only risk is that in the situation where the protocol is not well collateralized, they may have to pay a small slippage (equivalent to a transaction fee) for exiting.

By providing additional liquidity as insurance, Standard Liquidity Providers play a very important role in the protocol. As such, they can receive ANGLE governance token rewards by staking their sanTokens, allowing them to get rewarded for helping the protocol and incentivizing them to take part in the governance of the protocol.