Minting AquaUSD and DeFi Strategies: How to Maximize Profits in …

Minting AquaUSD and DeFi Strategies: How to Maximize Profits in the New Rewards Season

February 13th, 2025

Welcome to the New Season of Opportunities from Aqua Protocol – the financial platform that lets you unlock additional liquidity by using your assets as collateral. If you're planning to mint AquaUSD, this guide is for you!

Aqua Protocol is a financial platform where you can access additional liquidity (loans) by collateralizing liquid staking tokens, low-risk LP tokens, and real-world assets (RWA).

Just like a lambard: you don’t sell your assets but use them as collateral to mint AquaUSD — a decentralized, over-collateralized digital dollar on the TON network.

AquaUSD maintains a hard peg to the US dollar through the Redeem mechanism: you can always exchange AquaUSD for $1 within our protocol!

AquaUSD is traded on the DEX aggregator Swap Coffee and can be easily swapped for any other token on TON.

Why Mint AquaUSD?

When you mint AquaUSD, you receive a loan backed by your assets. The current borrowing rate is 10% annually, so to achieve real profits, you need to implement strategies that yield returns above this rate.

Key Highlights:

Access Liquidity: Use your assets to generate additional capital without selling them.
Your Profit: Apply smart strategies to earn returns that surpass the 10% annual borrowing cost.
Cashback Rewards: In the new season, borrowing fees are returned as Aqua RP. These points are distributed weekly and will be converted into AQUA tokens in the future — meaning active users won’t need to buy AQUA from the market (unless they want to increase their position). View your rewards in the Aqua Protocol app under Your Rewards.

Current Strategies to Earn Over 10% Yield

To make your loan profitable, we’ve prepared several lucrative DeFi strategies:

Helpful Tool: We’ve created a spreadsheet with calculations for each strategy. Copy it and experiment with the highlighted fields – [link to calculations here].

1. Looping (Spot Leverage)

“Looping” is the process of depositing collateral, borrowing against it, using the borrowed funds to buy the same asset, and then redepositing it into Aqua Protocol. Repeating this cycle several times helps maximize profits.

Examples:

Looping USDT-SLP (providing liquidity on a perp-DEX Storm Trade):

Max leverage: 5.7×Current yield: 22%Yield with leverage: 82.5%
Looping TON-SLP (providing liquidity on a perp-DEX Storm Trade):

Max leverage: 2×Current yield: 19%Yield with leverage: 22%If TON price doubles, yield rises to 76.4% compared to simply holding TON-SLP.
Looping DeDust Ton/USDT LP (providing liquidity on a DEX):

Max leverage: 2.6×Current yield: 8.5%Yield with leverage: 5.7%If TON price doubles, yield increases to 44%.
Looping tsTON (liquid staking):

Max leverage: 2×Current yield: 3.76%Yield with leverage: -2.4%If TON price doubles, yield reaches 21% compared to simply holding TON-SLP.

2. Borrowing and Providing Liquidity in the AquaUSD/USDT Pool

How it works:

Mint AquaUSD using your assets as collateral.
Swap half of your AquaUSD for USDT.
Provide liquidity to the AquaUSD/USDT pool.

This strategy is profitable if the liquidity provision APR exceeds the 10% borrowing rate. It becomes even more attractive if you believe in TON’s growth — you earn liquidity rewards and benefit from TON’s price increase without selling your holdings.

Risks

Before Using the Protocol, Consider the Following Risks:

Liquidation Risk: Unlike futures liquidations, Aqua Protocol offers partial liquidations if your collateral ratio (CR) falls below a certain threshold, and full liquidations if it drops significantly. In any case, the maximum liquidation penalty is 12%.
Slippage: In low liquidity conditions, swaps may experience slippage, although the protocol’s algorithms aim to maintain AquaUSD’s peg to $1.
Collateral Maintenance: It's important to monitor your collateral level – aim to keep it above the recommended level displayed in the app to avoid liquidation.
Yield Changes: As TVL grows, initial boosts/APR may decrease.
Smart Contract Hack Risk: While Aqua Protocol has undergone two security audits, vulnerabilities can never be fully ruled out.
Collateral Asset Risks: The value and reliability of your collateral assets may fluctuate.

Tip: Always do your own research (DYOR) and never risk more than you can afford to lose.

FAQ on AquaUSD

**Why is there no impermanent loss in the AquaUSD/USDT pair?**Because the pool consists of two stablecoins (AquaUSD and USDT) with fixed values.

**How does AquaUSD maintain its $1 peg?**Through the Redeem mechanism: if the peg drops below $1, you can always redeem AquaUSD at $1. Additionally, stability is ensured by over 150% collateral backing.

**How can I withdraw my deposit?**Repay your AquaUSD debt, then use the Repay and Withdraw functions to retrieve your collateral assets.

**What should I do if my collateral value drops?**Monitor your collateral level. If it decreases, add more collateral or repay part of your debt to avoid liquidation.

Conclusion

Minting AquaUSD is an excellent way to gain liquidity without selling your assets and take advantage of numerous DeFi strategies to boost your yield. With proper management and timely risk monitoring, you can earn returns that exceed the 10% annual loan rate, with additional Aqua RP rewards as a bonus.

Ready to start? Connect your wallet in the Aqua Protocol app and explore all the opportunities this new season offers!

Remember: Cryptocurrency investments always carry risks. Evaluate them carefully and make informed decisions.

!!!! Video Guide: How to Mint AquaUSD