How To: earn yield on STX with Arkadiko
For this guide we will assume the user has STX tokens and is familiar with the concept of 'Stacking', locking STX in a 2-weekly cycle to earn rewards in Bitcoin. For more information on the Proof of Transfer mechansism behind Stacking, take a look at the Stacks documentation.
Through Arkadiko, STX holders have an even better option than just natively Stacking. With Arkadiko, you can lock your STX within an Arkadiko Vault and take out a loan against your locked STX. The protocol will stack your STX for you and pay you 100% of the yield earned by the PoX-mechanism.
Note: We might change the payout percentage in the future, where not 100% of the yield goes back to Vault owners. Perhaps we reroute some of that yield as there is already enough incentive to use Vaults. In any case, governance will be the deciding authority if such a change is ever proposed. For now, Stacking through Arkadiko is as efficient as Stacking on your own, with no fees or loss of yield.
For the first 6 weeks, you will be earning DIKO based on the value of your Vault. You will also be able to take out a loan in USDA and use USDA within Stacks' DeFi Ecosystem. Initially, options for USDA will be limited to 1) using it to buy more STX or DIKO 2) provide liquidity in one of our swap pools.
When you buy DIKO with USDA, you can stake the DIKO to earn more DIKO. When you add liquidity to either the DIKO/USDA pool or the STX/USDA pool, you will receive a token representing your share of those pools. This LP (Liquidity Provider) token can then be staked on Arkadiko for a share of emissions.
This means that by opening an Arkadiko Vault, adding some STX to it and minting some USDA, you are increasing the yield available on your STX. Previously, you were only earning PoX-yield at best, when you now are compounding several layers of yield on top of each other:
1) Regular Stacking yield from the PoX-mechanism by Stacks.
2) For the first 6 weeks, DIKO Vault Rewards through the Liquidity Mining Launch Event
3) USDA liquidity which can be used to earn DIKO rewards by participating in liquidity pools