💵 How does Alluo get the yield?

This page gives you a bit more background to the protocol and where the yield comes from.

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Last updated 2 years ago

💵 How does Alluo get the yield?

This page gives you a bit more background to the protocol and where the yield comes from.

📝 Background

If you’re here we assume you’ve read the , and a bit about and and are looking to dig deeper.

That said as a reminder, Alluo enables its users to earn a great yield for the assets (stablecoins and the major crypto coins) they purchase and hold through the Alluo mobile app or stake in the farms through the Alluo web app.

The protocol is a cross-chain yield optimisation and liquidity direction protocol and our mobile app is a non-custodial wallet deployed on Polygon.

Note that Alluo is not a bank and funds invested on Alluo are not protected by a government-backed scheme such as FDIC, FSCS or other such schemes.

❓So what actually happens?

Alluo’s deposits (from either our non-custodial or ) are are held in a variety of stablecoins (e.g. DAI, MIM, USDC, USDT, FRAX etc.).

Every two weeks the $Alluo token lockers (those who bought, held and locked up their $Alluo tokens) vote on where to deploy/invest Alluo’s deposited funds from a selection of Curve and Convex liquidity pools. Once deposited in the pools, the funds earn yield and rewards which Alluo claims and returns a share to Alluo depositors.

💡 Liquidity pools can get quite complex. Put simply, they are pools of tokens that sit in smart contracts and can be exchanged or withdrawn at rates set by the parameters of the smart contract. Adding liquidity to a liquidity pool gives you the opportunity to earn trading fees and possibly rewards.

💁 Why can’t I just do this myself?

An individual customer can of course buy tokens, deposit them into the Curve pools, earn rewards, claim rewards deposit into Convex, claim rewards and convert back to their token/stablecoin of choice. However, this multi-step process is at best time consuming and is certainly not straightforward for average users.

Moreover, it is often not cost effective for smaller deposits, especially if you want to spread your deposits over multiple pools. Alluo, takes away this cost and friction simplifying this experience significantly.