Impermax Brings Indirect Liquidity Providing to Polygon

Chaz Schmidt
Jul 22, 2021
|4 minutes read
impermax liquidity polygon

On the heels of the first DeFi Summer and with the rise of NFTs, demand to use Ethereum grew to unprecedented proportions in late 2020 and early 2021. This massive demand led to Ethereum gas prices becoming painfully high on numerous occasions, which in turn boxed out more than a few users from being able to afford to use DeFi apps at the time. 

The good news? Ever since they started, these gas surges have created a major sense of urgency to embrace scaling solutions around the Ethereum and DeFi communities. An early star among these upstart solutions has been the Polygon project’s proof-of-stake (PoS) sidechain, which has been custom-tailored to service Ethereum users and devs with familiar UX and extremely fast, near-free transactions.   

Understandably, then, these advantages have catalyzed a major migration of liquidity over to Polygon in recent months. As the pioneers of Indirect Liquidity Providing, the Impermax Finance team knows the name of the game now is getting their promising, novel lending innovation out far and wide to Ethereum’s new scaling hubs. Accordingly, cue in Impermax’s newly announced launch on Polygon!

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Impermax to bring vitality to Polygon’s AMM scene

Impermax’s deployment on Polygon will be notably mutualistic because of how Impermax is designed. 

Remember, Impermax is a protocol for borrowing and lending decentralized exchanges’ liquidity provider (LP) tokens. As such, the project’s infrastructure has been specialized to offer what its creators call Indirect Liquidity Providing. This entails users lending either one or both of the assets associated with a given Impermax lending pool. The MATIC-WETH LP pool accepts MATIC and/or WETH deposits.

Borrowers, who are LP token holders themselves, can then take these deposits and convert them into more LP tokens for leveraged yields, all the while assuming all impermanent loss (IL) risks and paying a cut of their earnings to Impermax lenders. Indirect Liquidity Providing offers Polygon users something of a win-win-win dynamic, then. It lets lenders yield farm in low-risk, one-step fashion; it lets borrowers boost their LP yields; and it lets automated market maker (AMM) projects attract more liquidity because the UX around LPing becomes easier. 

Alas, by deploying to Polygon the Impermax project not only stands to gain liquidity via its borrowing and lending services, it stands to help Polygon’s AMMs, starting with the sidechain’s popular QuickSwap DEX, win over liquidity easier. 

Impermax adds QuickSwap and staked LP token support

QuickSwap, a Uniswap V2 fork, has become Polygon’s most popular AMM to date. And since Impermax’s Ethereum implementation launched with support for Uniswap V2 LP tokens, adding support for QuickSwap’s LP tokens was a natural first step for the lending project’s cross-chain advances. 

That support was announced on June 17th alongside the announcement of Impermax’s Polygon deployment. On the news, Impermax founder Simone Rigolon said: 

“This move will allow more users access and support to QuickSwap’s many assets allowing Liquidity Providers to increase their yields and lower their risk at a very low cost. Impermax simplifies liquidity providing but it also continues to enable high growth across key L2 platforms without users paying exorbitant fees.”

Yet it’s also the case that QuickSwap is currently offering some compelling liquidity mining rewards as denominated in the DEX’s native $QUICK token, so what’s a user to do if they want to earn $QUICK via staking their QuickSwap LP tokens but they also want to use these LP tokens as collateral on Impermax? Fortunately, you no longer have to choose between these options courtesy of Impermax’s new support for staked LP tokens

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This means you can now automatically earn $QUICK staking rewards for supported pairs while using your staked LP tokens as collateral in Impermax. Have your cake and eat it too, DeFi style!

Diving deeper

Going forward, the Impermax team plans to integrate with further DEXes, like Sushi and PancakeSwap, and other chains and scaling solutions. In the meantime it’ll be interesting to track Impermax’s growth on Polygon, the lending protocol’s first cross-chain deployment. If you’re keen on staying up to date on upcoming developments around Impermax, consider following Impermax on Twitter or join the Impermax Discord or Telegram channels. 

Disclosure: This post is part of our paid promotional DeFi Pulse Partner Program; We’ve partnered with Impermax to help educate and inform the community about its permissionless lending markets. As always, we’re committed to providing the entire community with quality, objective information, and any opinions we express are our own.