How to provide liquidity to Tesseract Vaults on Polygon
In this guide we will explain how to provide liquidity to Tesseract vaults on the Polygon network to earn swap fees and yield farming rewards that are auto-compounded.
What is Polygon?
Polygon is a scaling solution for Ethereum with fast and cheap transactions. It is a seperate blockchain with different features and parameters which requires moving funds across a “bridge” to get on the Polygon network. The Polygon network uses different technologies than Ethereum Layer 1 so it has a different security model and is able to have lower transaction costs.
What is Tesseract?
Tesseract Finance is a multi-dimensional yield farming protocol that was part of YFI Combinator program whose goal is to work on growing and nurturing the Yearn ecosystem outside of the Ethereum mainnet. Tesseract vaults are designed to generate yield using the best yEarn strategies adapted for Polygon. Yearn Finance became the main gateway for people on Ethereum to get exposed to DeFi yield farming opportunities without the hurdles, and Tesseract is hoping it will do the same for users on Polygon.
Tesseract has a very straightforward user experience compared to some other vault projects. Deposit one token in, and earn that same token as a reward when you withdraw. Single asset deposits only, no LP tokens.
What you will need to provide liquidity on MATIC Sushiswap
- Metamask wallet
- MATIC tokens in your Polygon wallet for gas
- Tokens to deposit into the vaults
Setting up the Polygon network with your Metamask wallet
First, you will need to configure your Metamask wallet to connect to the MATIC network. You will need to open Metamask and click on the Network selection dropdown and then click on Custom RPC.
Fill out the empty fields as shown in the picture above and click on Save. You will be directly switched to Matic’s Mainnet now in the network dropdown list. This process adds the MATIC network to the list of available networks you can switch to from within Metamask. Sometimes it is helpful to switch networks when Metamask is acting strange or if you are having trouble getting things to show up.
Here is the list of the parameters so you can easily copy them:
- Network Name: Polygon Mainnet
- New RPC URL: https://polygon-rpc.com/
- Chain ID: 137
- Currency symbol: MATIC
- Block explorer URL: https://polygonscan.com/
Move funds from ETH network to Polygon/Matic network
The Polygon Wallet interface has a section labeled “Bridge” and it will bring you to the interface pictured above. Once you have moved funds over to the Polygon networks you can manage them from the same Polygon Web Wallet interface .
Finding the right Vault to provide liquidity to on Tesseract
Tesseract focuses on single asset vaults that only require depositing one type of token. They strive to keep it simple for the end user, you deposit one token and get the same token back as your APY. It is an extension of the concept from Yearn vaults, where they do a similar thing. That being said, the back end involves an implemented strategy to farm and sell rewards to create the yields that are then given back to the pool.
Vault types: Single Asset
Supported tokens: WETH, WBTC, DAI, USDC, MATIC
You can check which individual vaults are supported by APY.vision here.
Steps to add liquidity to Tesseract vaults
Identify which vault you would like to deposit to and make sure you have the single token (DAI) needed to deposit. In this example we are using the DAI vault. You will need to sign an “Approve” transaction before you can deposit.
Once you have “Approved” the vault, you are then given the option to “Deposit” as shown above. Click the “Deposit” button and confirm the transaction.
Tracking Your Position on APY.vision
First time APY.vision users – enter your Polygon address in the box highlighted above. On mobile/tablets click on the search icon and copy their address into the popup
Once your vault position is deposited on Tesseract, you can start tracking the performance of the vault. APY.vision will separate the deposit (DAI) activity from the vault activity (the compounding rewards) as shown above. Click on the “View details” button to see more information about your vault position.
Above is the “More details” page for the DAI vault position. You can see a breakdown of your gains in the vault from a few different perspectives. The three tabs on the left will each give you a different view when clicked on. The screen you are seeing above is the “Vault gains” section. For more information on the APY.vision features for tracking vaults, read this article.
How to withdraw and what to expect
Check out this link for more information on how fees work on Tesseract. Each vault has a performance fee of 20% and is deducted from the yield earned every time a vault harvests a strategy. The management fee is 2% and it represents a flat rate taken from vault deposits over a year.
Fees will automatically be deducted upon withdrawal. Once you withdraw you will get back the balance listed in the same token that you deposited with, in this case DAI.
Providing liquidity to vaults is a great way to earn some income on tokens sitting in your wallet. Be aware of the types of vaults you are using, some are single asset deposits and therefore not subject to impermanent loss while others use LP tokens instead and auto compound rewards for higher APY’s. To read more about the risks, we highly recommend reading this post. We suggest using APY.Vision to keep a close eye on your positions to know when to remove liquidity during times of extreme price volatility.
APY.Vision does not give investment advice and always insists that you do your own research. Read our full Legal Disclaimer.
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