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Boost Bitcoin with Chainflip: High-Yield Opportunities for Liquidity Providers

Shaun Janse van Vuuren

Oct 17, 2024 • 3 min read

Boosted swaps by Chainflip allow users to Boost Bitcoin swaps with similar speed and efficiency found in centralised exchanges. Typically, swapping native Bitcoin can be slow, with block times taking up to 40 minutes for confirmations. However, with Chainflip Boost, this process becomes much faster, enabling users to complete swaps with just one confirmation instead of the usual three. This feature helps you access your Bitcoin more quickly while still maintaining security.

How Chainflip Boost Works for Bitcoin Liquidity Providers

Chainflip Boost works by allowing liquidity providers (LPs) to collateralise their Bitcoin for faster swaps. Instead of waiting for three confirmations, a Boosted swap finalises in just one, providing faster settlement to the swapper. The Swapped Bitcoin goes into the Boost pool, and stays locked for the remaining confirmations to finalise. This mechanism speeds up Bitcoin swaps and offers LPs a unique opportunity to earn yields by providing liquidity.

Bitcoin Boost: Benefits, Yields, and Risks

Benefits of Boosting Bitcoin:

High Native Bitcoin Yields: As most Bitcoin swaps on the Chainflip product are Boosted, LPs enjoy high yields—sometimes up to 100% during strong volume days. As more integrators activate Boost, the volume, and yields, will likely increase.
No Impermanent Loss: Unlike other liquidity pools, providing Boost liquidity on Chainflip eliminates impermanent loss. LPs supply their Bitcoin directly, and it is returned along with a small fee, all in Bitcoin.
Native BTC Yield: LPs earn 0.05% in fees paid directly in Bitcoin, providing a native Bitcoin yield that lets them grow their BTC holdings without needing to convert to other tokens.

Risks:

Reorg Risk: One of the risks LPs face is reorganisation (reorg) risk, where the Bitcoin blockchain reorganises its blocks. While rare, this can impact the confirmation process. However, Chainflip has mechanisms in place to manage this risk.

Step-by-Step Guide to Providing Boost Liquidity on Chainflip

Here’s how to start earning native Bitcoin yield by providing Boost liquidity on Chainflip.

Connect Your Polkadot or Metamask Snaps Wallet

Head over to lp.chainflip.io and connect either your Polkadot or Metamask Snaps wallet. If you haven’t set up a wallet yet, follow the instructions on screen to create one.

Deposit FLIP to Cover Fees

Deposit some FLIP into your account to pay for Chainflip transaction fees. You can easily swap for FLIP through Chainflip’s swapping app

Step 1: Connect your Polkadot wallet or use Metamask Snaps. Step 2: Deposit some FLIP in to the account and complete the onboarding

Deposit Bitcoin into Your Chainflip Account

Navigate to “Balances,” select Bitcoin, and click “Deposit.” You’ll need native Bitcoin for boosting.

Send Bitcoin to the Boost Pool

Copy the provided deposit address and send your Bitcoin. You can even boost your deposit for quicker confirmation.

Step 3: In balances, click on deposit. Step 4: Next, send the amount you want to deposit.

Choose Your Boost Pool

Once your Bitcoin arrives in your account, visit the Boost Pools section and select the pool with the fee tier that suits you best. All pool stats are available for review.

Add Boost Liquidity

Click “Add Liquidity” and enter the amount of Bitcoin you want to add as Boost liquidity. Confirm your selection by clicking “Add Boost Liquidity.”

Step 5: Go to "Boost Pools" and select a pool of the fee tier you prefer. Step 6: Click on the "Add Liquidity" button

Manage Your Boost Position

From the LP dashboard, you can monitor your stats, view the performance of your Boost liquidity, and withdraw when needed.

Step 7: input your amount that you want to add in to the pool. All set!

Ready to Boost Bitcoin and Earn Native BTC Yields?

Get started today by providing liquidity through Chainflip’s Boost pools and take advantage of high yields and native Bitcoin returns. All questions can be directed to our Chainflip Discord, Telegram, or Twitter for assistance.

Happy Boosting!