Hegic AutoStake is a pair of smart contracts designed for liquidity providers to effortlessly redeem & stake their yield farming gains.
Liquidity providers of @HegicOptions are rewarded rHEGIC, an IOU token that can be redeemed for the real HEGIC token gradually over 6 months, once the milestone of $100M total option volume is achieved.
To maximize gains, one will want to redeem HEGIC at regular intervals (e.g. once a week) and stake those in one of the staking pools (hegicstaking.co zLOT, or the upcoming yHEGIC vault) to earn fees generated by the protocol. However, this process:
Of course, one can choose to wait after the full 6 months, then redeem the full amount in one batch. However, this would mean missing out on half a year’s gain in staking rewards, which could be a considerable amount at the current APY.
AutoStake was created to solve this problem. Each user will need to do no more than 2 transactions: deposit rHEGIC & withdraw zHEGIC, and therefore incur only 2 taxable events, while earning fees in staking pools. This is how it will work:
redeemAndStake) at regular intervals (e.g. once a day) which will redeem the maximum possible amount of HEGIC, and stake those zLOT. The contract will receive zHEGIC tokens;
Users can withdraw zHEGIC at any time during the 6 months. The withdrawable amount is calculated as follows:
amountZHegicWithdrawableByUser = amountZHegicStaked * amountRHegicDepositedByUser / amountRHegicDepositedByAllUsers - amountZHegicAlreadyWithdrawnByUser
At the end of the 6 months, the user can withdraw the full amount of zHEGIC he's entitled to.
There will be a fee of 2% upon withdrawal. That is, if a user withdraws 100 zHEGIC, he will receive 98, and the developer will receive 2. The fee is charged to compensate the developer of the gas he has to pay for deploying the contracts & calling functions over the 6 months.
The contract allows the developer to change the fee rate at anytime between 0 – 5%, but it can never go above 5% (proof). The developer promises to never increase the fee without fully communicating with users (this is where you have to trust me).
As always in crypto, Don’t Trust, Verify. Users are encouraged to review the code (contracts, frontend) and assess its security before making any deposit. The developer will not (and cannot afford to) provide users compensation in case funds are lost due to hacks or glitches in the code.