Safety Module (LP Staking)
The Safety Module enhances the protocol’s resistance to bad debt events by incentivizing LPs to participate in risk management by staking their LP position. LP positions staked in the Safety Module are the first line of defense against bad debt and will be automatically slashed in the event of a bad debt event.
In exchange for bearing a greater portion of the bad debt risk, staked LPs earn additional yield. This creates a dual-tranche LP pool: staked LPs earn higher returns but take on more risk (junior tranche), while unstaked LPs earn lower returns with reduced risk (senior tranche). More details on lending risks can be found in the Lending Risks section.
The Safety Module reduces risk for non-staking LPs and increases rewards for staking LPs.
Staking returns do not need to be claimed. They are automatically included in staker’s returns.
How to Stake
Connect your wallet
Navigate to the “Stake” section
Click “Stake”
Enter the amount of aeUSDC you wish to stake in the Stake modal
Confirm the transaction in your wallet
LPs can choose to stake a portion of their position or their entire position. Additional yield will only be accrued on the staked portion. The blended rate is displayed in the Stake modal and the Stake section.
How to Unstake
Connect your wallet
Navigate to the “Stake” section
Click “Cooldown to Unstake”
Set the optional Calendar Reminder or Telegram Notification in the “Cooldown to Unstake” modal
Confirm the transaction in your wallet
Unstaking involves a “Cooldown Period” during which the gTokens are no longer eligible for yield accrual. The Cooldown Period is set by governance and is displayed in the Unstake modal and the Stake section. Positions that are in the Cooldown Period and positions that have completed the cooldown period but have not been withdrawn will still be slashed in a bad debt event. For this reason, LPs should remove their position after the Cooldown Period has ended.
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