spBNB/BNB Farm

The spBNB/BNB liquidity pool is the foundation of SPAI Finance—a pseudo-stable pair designed to minimize impermanent loss while providing attractive yields.

Pool Overview

  • Assets: spBNB + BNB

  • Reward Token: SPAI

  • Risk Profile: Lower (minimal IL when peg holds)

  • Best For: Conservative farmers seeking stable yields

Why This Pool Matters

When spBNB maintains its 1:1 peg to BNB, this pool functions similarly to a stablecoin pair—you're providing liquidity between two assets that should have equal value.

The Stable Pair Advantage

Traditional LP pools like ETH/USDC face significant impermanent loss when prices diverge. If ETH doubles, your LP position underperforms simply holding ETH.

But spBNB/BNB is different:

  • Target: 1 spBNB = 1 BNB always

  • Small deviations: 5% depeg = only 0.06% IL

  • Mean reversion: Peg mechanisms work to restore 1:1

  • Predictable behavior: Know roughly what to expect

This makes it ideal for users who want DeFi yields without the stress of watching massive IL accumulate.

Impermanent Loss Analysis

Understanding IL risk in this pool:

When Peg Holds (0.99 - 1.01)

  • IL: Near zero (~0.001%)

  • Position: Remains balanced

  • Behavior: Like a stablecoin pair

  • Risk: Minimal

You're earning trading fees + SPAI rewards with negligible IL.

Small Deviation (0.95 - 1.05)

  • IL: Under 0.5%

  • Position: Slight imbalance

  • Behavior: Still very stable

  • Risk: Low

Minor IL easily offset by trading fees and SPAI rewards.

Significant Deviation (0.85 - 1.15)

  • IL: 1-3%

  • Position: Noticeable imbalance

  • Behavior: Concern for peg health

  • Risk: Moderate

At this point, IL becomes meaningful. However, peg mechanisms should be actively working to restore 1:1.

Severe Depeg (<0.85 or >1.15)

  • IL: 3-10%+

  • Position: Heavily imbalanced

  • Behavior: Protocol stress

  • Risk: High

This is danger territory. Most users should exit before reaching this level.

Yield Sources

Your returns come from three sources:

1

SPAI Emissions

  • Primary reward source

  • Distributed continuously

  • Claim anytime (subject to PSM fee)

  • Compounds over time

Expected early APR from emissions: 70-150% (decreases over time as emissions taper)

2

Trading Fees

  • 0.25-0.30% on every swap

  • Arbitrageurs trading around peg generate volume

  • Accumulates in LP position

  • More volume = higher fee revenue

Typical fee APR: 5-15% depending on volume

3

Reduced IL

  • Technically not "yield" but preserves capital

  • Avoids the 5-20% IL common in volatile pairs

  • Lets you keep more of your earnings

Entry Strategy

Optimal Entry Conditions

Best time to enter:

  • TWAP between 1.00-1.02 (stable, slight expansion)

  • Treasury backing >100%

  • TVL stable or growing

  • No broader market crisis

Avoid entering when:

  • TWAP <0.95 or >1.10 (peg stress)

  • Treasury backing <100%

  • TVL rapidly declining

  • Market-wide panic

Position Sizing

Conservative approach:

  • Start with 2-5% of total portfolio

  • Monitor for 1-2 weeks

  • Scale up if comfortable

  • Never exceed 10% in any algorithmic synthetic

Active Management

This pool requires less management than volatile pairs, but still needs attention:

Daily Checks

  • TWAP (is peg holding?)

  • Any major price movements

  • Broader crypto market conditions

Weekly Reviews

  • APR trends (emissions + fees)

  • IL calculation (actual vs expected)

  • Treasury backing ratio

  • TVL trends

Monthly Actions

  • Compound rewards or take profits

  • Reassess position size

  • Compare to alternative opportunities

Exit Triggers

Set predetermined exit conditions:

Immediate Exit

  • TWAP drops below 0.90 (severe depeg)

  • Smart contract exploit announced

  • TVL drop >20% in 24 hours

Gradual Exit

  • TWAP below 0.95 for 3+ consecutive epochs

  • Treasury backing falls below 95%

  • TVL declining steadily (>10% weekly)

  • Better risk-adjusted opportunities emerge

Profit Taking

  • Position value up >30%

  • SPAI price elevated significantly

  • Want to derisk after strong run

Comparison to Other Stable Pairs

How spBNB/BNB compares:

vs USDC/USDT

  • spBNB/BNB: Higher APR (SPAI rewards), higher risk (peg can break)

  • USDC/USDT: Lower APR, negligible risk

vs spBNB/Stablecoin

  • spBNB/BNB: Native pair, better liquidity, no external depeg risk

  • spBNB/BUSD: Could be created but adds complexity

vs Traditional LP

  • spBNB/BNB: Near-zero IL, moderate APR

  • BNB/altcoin: High IL, potentially higher APR

Who This Pool Is For

Ideal for:

  • Risk-averse users wanting DeFi yields

  • Those who understand and accept peg risk

  • Farmers seeking ~50-100% APR with manageable downside

  • Users wanting to support protocol liquidity

Not ideal for:

  • Users seeking 500%+ APRs (choose SPAI/BNB instead)

  • Complete risk avoidance (stick to stablecoins)

  • Users who can't monitor positions regularly

  • Those unfamiliar with algorithmic synthetics

Tax Considerations

  • LP creation: Potentially taxable event

  • Reward claims: Taxable income

  • Compounding: Each compound is a taxable event

  • LP removal: Capital gains/loss on position

Consult a tax professional familiar with DeFi to ensure compliance.

Advanced Tactics

Concentrated Liquidity

If available on the DEX:

  • Tighten range around 1:1 peg

  • Earn more fees per dollar liquidity

  • Higher risk if peg breaks range

Auto-Compounding

Use yield aggregators:

  • Automatically compound rewards

  • Saves time and gas fees

  • Small fee (0.1-4.5%) for convenience

  • Additional smart contract risk

Hedging

For sophisticated users:

  • Short SPAI to hedge protocol risk

  • Use options (if available) to protect downside

  • Diversify across multiple protocols

PreviousTreasury Backed ExpansionNextSpai/BNB Farm