🪂Three Leverage Strategies to Help You Efficiently Capture the Sonic @SonicLabs June Airdrop"One Fish, Multiple Meals" Secret Technique Showcase.This article is from: Bankless @BanklessHQ; Original author: @0xSim0In June, Sonic will distribute 190.50 million $S tokens, of which 25% of the rewards can be claimed immediately, and 75% will be gradually released in the form of tradable #NFTs. There are two ways to qualify: Points (for network participants) and Gems (for builders), both of which could yield returns far exceeding speculative airdrops.Ready to boost your points? The three strategies shared below may help you capture Sonic's June airdrop more efficiently. ⬇️⬇️⬇️PreparationTo start interacting with the protocols on Sonic, you'll need some initial funds to carry out interactions, as well as some S to pay for gas fees. You can opt to use any standard EVM wallet (like Rabby or Metamask) and bridge into Sonic through cross-chain bridges like deBridge.Strategy 1: Silo Circular LendingThis is currently one of the most popular and relatively simple strategies on Sonic, aimed at maximizing point rewards while earning base returns. This strategy will utilize the mainstream lending protocol Silo v2 on Sonic.The core of this strategy lies in the following operational loop:1. Obtain some stS by staking S or exchanging any token for stS on a DEX.2. Deposit stS into Silo Finance's S/stS lending market, which will earn you Sonic points, Silo points (points redistributed by Silo through Gems), and yield (stS currently generates about 5% base yield, plus Silo's deposit APY).3. Borrow S from the market (if you want to earn yield, the borrowing APY should be lower than the sum of stS's base yield and the aforementioned deposit APY).4. Exchange the borrowed S for stS.5. Repeat from step 2, looping the operations.Due to the close correlation between stS and S, the liquidation risk of borrowing the maximum amount is low, allowing you to effectively achieve a 20x leverage effect (applying to both points and base returns), with a loan-to-value ratio (LTV) of about 95%.For every $1 of stS you deposit, you can earn 8 times the rate of Sonic points and 1 Silo point (leverage can amplify this to 20 times), while for every $1 of borrowed S, you can additionally earn 0.5 Silo points (also amplifiable to 20 times).Furthermore, you currently earn 2% base yield on stS deposits. If the borrowing rate for S is too high or the deposit rate for stS is too low, you can also reverse the loop (deposit S and borrow stS).Note: This strategy can also be used on Euler, but due to the 90% LTV limit, the leverage is only 10 times. However, Euler's operations are simpler and suitable for users seeking convenience.Strategy 2: Euler Finance + Rings Protocol Combination StrategyThis strategy will utilize two major protocols: Euler Finance and Rings Protocol.Euler is another lending protocol that has expanded to Sonic and has provided additional incentives for the network; Rings is a new asset protocol on Sonic that currently supports USDC, ETH, and BTC. Users can deposit these assets into Rings (which will then be deposited into the Veda strategy vault to earn yield) and mint Rings versions of liquidity derivative tokens, which can be staked/locked for additional yield or used within the Sonic ecosystem.The highlights of this strategy are as follows:- Minting Rings liquidity derivative tokens can earn Sonic Points and Rings Points (i.e., Gems);- These Rings assets can be used across major protocols on Sonic to earn yield + incentives;- Euler offers a one-click circular lending feature, allowing for rapid 10x leverage in highly correlated strategies.The specific operational steps are as follows:1. Choose a market on Euler currently enjoying additional incentives (such as USDC.e/scUSD or scETH/wstscETH).2. Compare the maximum ROE on the Euler strategy page to determine which assets to deposit and borrow.3. If choosing to deposit Rings version liquidity derivative tokens, you need to mint them in the Rings protocol first.4. Use Euler's Multiply feature to achieve circular lending with one click, obtaining the desired leverage.This strategy also enjoys other additional opportunities, as Rings is rumored to also conduct an airdrop, adding more expected returns to this strategy.Strategy 3: Shadow LPShadow is one of the most commonly used decentralized exchanges (DEX) on Sonic.It has a huge trading volume and an interesting economic model. Providing liquidity on Shadow can earn native tokens SHADOW, Sonic points, and Gems incentives.First, let's review the first two strategies. If a large number of users choose to cycle their S/stS on Silo and other protocols, where will they exchange these assets?The answer is Shadow!If they frequently engage in this, it will generate a significant amount of transaction fees, which will belong to the liquidity providers. Additionally, liquidity providers can also earn Sonic points, Sonic Gems, and SHADOW token rewards, naturally forming a strategy with very high capital efficiency.Under the most aggressive price range setting (which can be done due to the high correlation of S and stS), this pool currently offers an APR of 169% and 16 times Sonic points.It is worth noting that you can also use https://t.co/pojEeK7PwH (a liquidity management tool powered by Sickle, now compatible with Sonic and Shadow) to automatically balance LP positions, and you can perform one-click entry and exit, automatic compounding, etc., but it is currently uncertain whether Sonic points can be earned through this method.Hedging InsuranceThe above strategies mostly rely on volatile assets like S or ETH. If the prices of these assets drop, it may severely affect the actual return rate and even lead to losses. Therefore, we need to implement certain hedging operations.The specific method is as follows:Open a short position with 1x capital on perpetual contract exchanges. If the price drops, the profit from the short position will offset the capital loss from the airdrop strategy.Sometimes these perpetual positions can also earn (or pay) funding rates.Recommended platforms:HyperliquidX: Supports S trading (needs to be cross-chain from Arbitrum).Vertex protocol: A relatively new perpetual contract exchange that runs directly on Sonic.It should be noted that this hedging mechanism will also sacrifice potential profits from the price increase of tokens like S while mitigating losses.Looking AheadThe opportunities to earn points and returns on Sonic will continue to increase. With new protocols being launched on-chain every day, such as the rumored Pendle will soon deploy on Sonic (Odaily Note: it has actually been deployed, allowing participation in the "Lazy U-based Wealth Management Guide (Issue 2)" to efficiently earn points using stablecoins), there will be an increasing number of new strategies emerging.For users intending to cultivate Sonic's June airdrop, it is essential to keep a real-time watch on the development trends of this ecosystem and to timely seek and adjust the most efficient "point earning" operations.
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