The Fantom ecosystem is still one of the hottest places in all of DeFi, with an incredible variety of opportunities and money-making strategies available.
One of the most intriguing DeFi protocols on Fantom has to be SoulSwap Finance, which despite its impressive utility has gone under the radar compared to other well-known Fantom protocols like Liquid Driver and SpookySwap.
With so much happening in the space and new projects popping up every month, it’s easy to overlook gems with massive potential.
In this guide, I will be covering everything you need to know in order to get the most out of SoulSwap, and why this project could become one of the key anchors of the Fantom ecosystem in the not too distant future.
What is SoulSwap Finance?
On the surface, SoulSwap is a DEX, or decentralized exchange. Users can easily swap tokens or provide liquidity, aided by one of the cleanest UIs in all of DeFi.
However, once you start poking around, you quickly realize that SoulSwap Finance has a lot more to offer than low cost swapping and the same old farms.
In fact, the protocol offers an incredible degree of utility, arguably the most in any one place in all of Fantom.
SoulSwap offers traditional swapping on select token pairs, a unique staking system for its native token, a robust bonding system (not unlike Olympus and its forks), limit orders, bridging, borrowing, and lending as well.
Perhaps the most innovative (and fun) feature SoulSwap offers is its unique take on liquid staking, which I will elaborate on further below. However, there’s a lot going on within the protocol that makes it a dream for DeFi veteran and newcomers alike.
It’s surprisingly easy to make decent returns with the tools that SoulSwap offers, but the features of the protocol are not nearly the only highlights of the project.
For one, the project is headed by highly reputable devs that constantly communicate with the community. New features continue to be rolled out all the time, so it is no way a stagnant project.
Another perk of SoulSwap is that through bonding, the protocol is acquiring a great deal of liquidity. POL (Protocol-owned Liquidity) is one of the hottest subjects in Defi right now, because it allows protocols to reach a new degree of sustainability.
A good portion of the $SOUL emissions are allocated for these bonds, making the APR on them very attractive. For those who are all in on $SOUL and the ecosystem as a whole, bonding is a smart move.
Introduction to Farming on SoulSwap
The heart of any good DEX is its farming options, at least from the investor point of view.
Unlike most protocols in DeFi these days that provide a buffet of risky options for investors, SoulSwap keeps it relatively simple with blue chips and its native ecosystem tokens.
This makes figuring out a lucrative strategy relatively simple.
Of course, if you hold other popular tokens on Fantom and are looking for liquidity pools and farming options for them, you have your pick of Liquid Driver, Beethoven X, SpiritSwap, and others.
To start farming, all you have to do is get some liquidity pool tokens (Soul -> Liquidity in the navigation). You also have the option to “zap” into any pool with any token in the ecosystem now, which makes the farming process absolutely seamless.
Farming rewards are paid out in $SOUL, the protocol’s native token. What’s great about $SOUL is that it is not just a useless farm token, so there is a lot of incentive to hold onto it rather than just dumping it for minimal profit.
When it comes to farming, there are always different strategies you can employ depending on your appetite for risk and also what tokens you prefer to hold.
The obvious pool to jump into here is FTM – SOUL. Not only does it have the highest APR (annual percentage rate) of all the pools, $SOUL and $FTM tend to follow each other closely in price. If $FTM pumps, $SOUL will too, and vice versa. This minimizes impermanent loss (not that IL is even an issue if you understand it and invest accordingly).
You will notice that there is another key ecosystem token here to consider, and that is $SEANCE. I will be elaborating on this token further but from a basic farming strategy perspective, the $SEANCE pools should be utilized as well.
It should be noted that you don’t necessarily have to farm $SOUL to benefit from the trades happening on the protocol. You can simply provide liquidity on your favorite pairs and collect fees.
FTM – DAI and FTM – USDC are also great pools with very respectable APR. If you are bullish on $FTM these are solid plays with great yield.
SoulSwap also offers $BTC and $ETH pools, for even more blue chip farming options.
In the past I’ve used the yield generated from the FTM – USDC and SOUL – USDC pools to reinforce my FTM – SOUL position. If you are less bullish on $SOUL and would prefer to gain exposure to $FTM, $ETH, or $BTC, you could do something like this in reverse.
For instance, farm with FTM – SOUL, convert $SOUL rewards to 50% $BTC and 50% $ETH, and add to the BTC-ETH pool.
Another great strategy would be to farm the FTM – SOUL pool and then stake half the return and add the other half back into the LP. This approach would indicate you are bullish on both $FTM and $SOUL.
In my opinion, you can’t unlock the full potential of SoulSwap’s farms until you begin staking your $SOUL in order to get some $SEANCE, however. Let’s take a look at how this works.
Like other protocols, SoulSwap gives you the option to stake its native token.
This is a great way to generate yield off of your yield.
However, SoulSwap offers a twist on this model. When you place your $SOUL tokens into the staking contract, you receive an equivalent amount of $SEANCE tokens in return. As long as your $SOUL remains staked, you will continue to generate yield in more $SOUL tokens (roughly 26% APR at the moment), however you can only unstake your original $SOUL tokens if you have the required amount of $SEANCE.
$SEANCE is basically a receipt token, but can be used for yield farming purposes.
For instance, you can take your $SEANCE and immediately sell it for $FTM or even $USDC.
You can see how this could open up a wide range of opportunities, since your original $SOUL tokens are still sitting in the staking contract earning yield.
This is a powerful form of liquid staking that enables you to deploy pretty complex DeFi strategies. You don’t even have to leave the SoulSwap ecosystem to do so, either.
SoulSwap even offers a SOUL – SEANCE pool that currently generates 24% APR.
Below I will outline a few $SEANCE strategies worth giving a try, but the important thing to remember is that if you want to reclaim your $SOUL tokens, at some point you will want to return the borrowed $SEANCE tokens.
How to Use SEANCE
Staking $SOUL in exchange for $SEANCE opens up a plethora of options if you want to get creative and take a few risks.
Here are just a few of the strategies I’ve experimented with:
- Convert $SEANCE directly to $SOUL and pair those tokens with $FTM to farm the FTM – SOUL pool. Use those rewards to add to the LP.
- Convert 50% of the value of your $SEANCE to $SOUL and enter the SOUL – SEANCE pool. Use those rewards to add to the FTM – SOUL pool.
- Convert $SEANCE directly to $SOUL, stake those tokens to get even more staking APR, loop several times. Increases your $SOUL yield with no risk of liquidation unlike other kinds of looping strategies.
- Convert $SEANCE directly to $USDC or $DAI to short $SEANCE and buy it back later at a lower price and make a profit.
- Take all of your $SEANCE and pair it with $FTM or $USDC for solid APRs between 60% – 75%. Add those rewards to the staking pool.
This doesn’t even take into account the additional strategies you can employ using $LUX, the ecosystem’s rebase token. For instance, you could convert your $SEANCE to $LUX and stake that for 187% APY.
Truly a dream for anyone obsessed with “DeFi Legos.”
The great thing about Soulswap is that you by no means have to get into these complex yield farming strategies to take advantage of the ecosystem. If you want to keep it simple you can purchase some $SOUL, stake it, and leave it.
Another simple approach to maximize your yield would be to stake your $SOUL, and then convert all of your $SEANCE to 2 stables of your choice, pair them, and put them in an auto-compounder or in the Steady Beets, Yearn Boosted pool on Beethovenx. 3% APR might not seem exciting but when you realize it’s pure profit off of borrowed tokens with zero chance of impermanent loss, it starts looking pretty attractive.
Lending Assets With Soulswap
Borrowing and lending has become a staple within DeFi – while many blame irresponsible investors with over-leveraged positions for much of the recent downtrend in crypto, at the end of the day it’s a feature that’s in high demand for a reason.
Decentralized lending and borrowing unlocks a world of lucrative opportunities for investors. Don’t worry about how others handle their money – instead, concern your Self with leveling up your mindset and educating your Self on the possibilities.
That being said, SoulSwap offers its own lending and borrowing system featuring unique isolated markets.
On the Lending page, you can view the various assets you can lend as well as the associated collateral and the APR you get for lending them out.
You can also farm with your lent assets. Yet another way to make money with the protocol.
If you have some $FTM or $DAI hanging out in your wallet and you don’t know what to do with it, this is certainly one option.
How to Short Tokens by Borrowing
Borrowing is one of the most powerful money-making strategies in DeFi. It comes with somewhat of a learning curve and substantial risk, but if you understand how to play the game, the sky’s the limit.
There are a few reasons why borrowing can be a powerful tactic. For instance, if you are bullish on a particular token ($SOUL, ahem), you can borrow against your $DAI for instance, swap the borrowed tokens for $SOUL, stake them, and employ one of the strategies listed above.
In this scenario, if the value of $SOUL goes up, you could theoretically pay back your loan and the remainder is pure profit. You can also slowly pay off your loan purely with staking rewards, regardless of price movement.
But what if the price of a particular token is expected to go down?
This is where shorting can potentially net you some gains even as the market dips, and SoulSwap gives you all the tools to do it.
If you are new to shorting and think it’s too advanced for you, it’s actually easier than you might think.
Let’s say you think the price of $ETH will go down over the next few days and you want to capitalize.
- Head over to the Lend -> Borrow page on the dApp, and select an $ETH market that has the collateral option you prefer.
- Provide the necessary collateral and borrow up to 75% of the value of your collateral in $ETH.
- Immediately swap your $ETH for a stablecoin of your choosing.
- The idea here is that you are predicting that $ETH will decrease in value and that you will be able to buy back the tokens at a lower price. The remaining stablecoin value is pure profit.
- Once $ETH reaches it’s desired price point, that is when you buy it back and repay your loan.
Be mindful that $ETH doesn’t increase in value over this same period or you could get liquidated. Whenever you’re dealing with borrowing, you have to have strong convictions and good instincts, but more importantly you have to take full responsibility for your investments.
If the markets don’t turn in your favor, be ready at a moment’s notice to add more collateral or repay your loan, even if it means taking a small loss.
You will notice on the borrowing UI that once you provide collateral there is an option for taking out a leveraged position. This allows you to loop your borrowed assets x-amount of times at once in order to increase the potential gains you can make off of token price movements.
This is the same as taking your borrowed tokens and adding them back as collateral over and over again, but in one transaction to save on gas and also execute quicker. Taking out a leveraged position can be a risky play, but if you time the market right you can make some easy money.
If you are just starting out, SoulSwap provides a great platform for getting acclimated to all of the different tactics you can use in DeFi. Whether you want to play it safe or go full degen, all the tools are there.
What’s Next For SoulSwap Finance?
There’s plenty to be bullish about when it comes to the SoulSwap ecosystem in its entirety, with plans to expand onto other chains and new features coming out quite literally all the time.
Only a few months ago $SOR, a stablecoin, was introduced into the ecosystem and now plays important part in making $LUX into a true reserve currency. From the SoulSwap Medium:
Whenever anyone converts DAI into SOR, 20% of the purchase value is used to interact with the SoulSwap Exchange to instantaneously swap DAI for LUX and subsequently store it in the SOR staking contract as a reserve currency.
In other words, it’s a rebase token with an actual sustainable model and with an actual purpose.
V2 farms are also right around the corner. You can now mint $LUX with SOR – FTM liquidity. And an unbelievable feature, cross-chain swaps, is about to drop and may already be live at the time this article goes live.
The cherry on top of all of this is the SoulSwap community, which is one of the best out there.
For anyone feeling a bit stranded from the recent market downturn, numerous failed projects and rugs, and just an all around crappy experience in DeFi, you may want to give SoulSwap a try. Cozy farming, staking rewards, limit orders, rebasinggg, leveraged borrowing. What more could a degen want?
*This guide is for educational purposes only and should not be construed as financial advice.
The founder of Digital Sages, Matt has an extensive background in self-mastery and has authored several books on the subject. His goal is to demystify important esoteric subjects and help people transform their lives through self-awareness and personal empowerment.