The initial yield optimizing strategy is now available on https://suipearl.fi/offshore. It is developed on the SUI lending pool on Scallop. In this post, we will explain how this strategy can automatically maximize your yield on Scallop in any situation.

How Scallop pools bring interest to users?

Scallop is a peer-to-peer lending and borrowing platform within the Sui ecosystem. As a lender, you have the opportunity to lend your coins to borrowers. These borrowers are obligated to pay interest on the amount they borrow, allowing you to earn interest in return.

Scallop also introduce sCoin concept. When users make a supply in Scallop lending pools, they receive sCoin that represents supplies (ex: sSUI for SUI supplies, sUSD for USDC supplies).

The main functions of these sCoin are:

• Interest-bearing: sCoin value will increase over time, reflecting the interest earned on deposits.

• Exchange Rate: The relationship between sCoin and its underlying assets is determined by the exchange rate. This is a value indicating how many underlying assets sCoin can be exchanged for. This exchange rate will grow over time as the interest earned on the deposit is added back to the underlying asset.

The price calculation of sCoin is based on the price of its underlying asset. The following are the basic concepts of sCoin price calculation: When you deposit to Scallop for the first time, the amount of sCoin you will get depends on the current exchange rate. But over time, the exchange rate rises due to the accumulation of interest.

For instance, the exchange rate of sSUI has risen to 1.007 SUI. This indicates that each sSUI now represents a larger amount of SUI. If you provide 100 SUI to Scallop, you will get 99.3 sSUI back in your wallet (100 / 1.007 = 99.3). (Red box 1 in the image)

And, even more excitingly, Scallop is currently running an incentive program. You have the opportunity to deposit your sSUI into sCoin Pools and earn an additional apx. 20% APR in SUI rewards. (Red box 2 in the image)

Theoretically, if the incentive program runs for 1 year, your 100 SUI principal will bring you 120.82 SUI on the last day of the year. It is good, but you might be asking yourself if there is a way to earn additional rewards from Scallop, right?

In fact, there is a way to accomplish that.

Compound interest - the eighth wonder of the world

You might come across the concept of compound interest from someone, but you may not consider it to be relevant to your wealth. However, in the world of investing, I would say that compound interest is the secret weapon of successful investors.

So, what is compound interest actually?

According to Investopedia:

Compound interest is the interest on savings calculated on both the initial principal and the accumulated interest from previous periods.

"Interest on interest," or the power of compound interest, will make a sum grow faster than simple interest, which is calculated only on the principal amount. Compounding multiplies money at an accelerated rate. The greater the number of compounding periods, the greater the compound interest will be. Compound interest can help your investments but make debt more difficult.

Albert Einstein and Warren Buffett are considered the wisest men in the world. And both of them confirm the power of compound interest:

"Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn't, pays it." - said Albert Einstein

"My wealth has come from a combination of living in America, some lucky genes, and compound interest." - said Warren Buffett

They made that statement. Let's confirm what they said by providing an example below:

Imagine that Alice and Bob both start investing with $100,000 as their initial investment. Alice chooses a Simple Interest strategy while Bob chooses a Compound Interest strategy. Both of them achieve an annual investment performance of 14%. Let's now explore how their wealth will grow after 20 years.

As you can see from the simulation above, Bob has already become a millionaire by year 18. This demonstrates the incredible power of compound interest and how it can help individuals accumulate significant wealth over time. In contrast, Alice has only managed to accumulate $380,000 at the end of the 20-year period. This stark difference in their financial situations clearly highlights the meaning of "He who understands it, earns it."

Upon closer examination of the chart, you will notice that there is a relatively small disparity in the balances of Alice and Bob during the first 5 years (Alice's balance = $170,000 and Bob's balance = $192,541). However, starting from year 6, Bob's progress accelerates significantly. This acceleration is a direct result of the compounding effect of his investments. By year 20, Bob's balance has grown to be 3.6 times greater than Alice's balance.

This simulation perfectly illustrates the significance of factors such as time, luck ("living in America"), genetics ("some lucky genes"), and mathematics (“compound interest”). The longer the time period, the more pronounced the positive effects of compound interest become.

SuiPearl can generate compound interest for you

Simply put, SuiPearl is running CronJobs, which are commands used to schedule specific tasks for periodic execution, on various farming pools within the Sui Network. These CronJobs aim to assist users in depositing funds into farming pools on platforms such as Scallop, Navi, FlowX, Aftermath, etc. ; harvesting rewards from those pools; swapping those rewards to the deposited tokens; and compounding the funds of users. By performing all these tasks round the clock automatically, SuiPearl optimizes the returns for users without requiring any manual monitoring or incurring transaction fees. SuiPearl only charges a small amount as performance fees on the rewards that will be appreciated by $PRL and $SCB holders later.

In a nutshell, SuiPearl can generate compound interest for your principal, based on this equation:

Where:

*     APY = Annual Percentage Yield which takes into account compound interest.*

*          APR = Annual Percentage Rate which represents the simple interest.*

*          N = Number of compounding periods*

On the UI of Scallop sSUI pool, you will find that the APR of this pool is 20.5%. Instead of depositing SUI into the Scallop, you have the option to deposit it into the Suipearl pool. Suipearl will harvest SUI rewards and then compound them to the user's principal every 15 minutes, resulting in a higher interest rate (in this case, the APY is 22.3%).

Maybe you might not notice a big difference between Scallop APR and SuiPearl APY. However, this pool is just the first strategy to show how the concept works in real-life. Similar strategies will be applied to other single pools such as USDC, USDT, or liquidity pairs like USDC/USDT; SUI/USDC, USDC/BUCK, and so on.

For example, the current APR of the SUI/USDC pair on Cetus is 105.39%. Once SuiPearl enables a strategy for this pair, it has the potential to generate an APY of 186.88%:

And that's a lot!

The Sacabam team is actively working on additional protocols such as FlowX, Navi, and Aftermath to offer more rewarding APY pools on the OffShore page.

About SuiPearl

SuiPearl is a yield aggregator for the Sacabam meme project. With SuiPearl, users can enhance their yield earnings by utilizing various farming strategies on the Sui network.

• Website: https://suipearl.fi/

• X channel: https://twitter.com/suipearlfi

• Telegram Group: https://t.me/sacabam

• Sacabam website: https://sacabam.fun/