The Beginner's Guide to Saber
The world of DeFi might get overwhelming at times, particularly due to the new crypto tokens and DApps flooding the space every other day.
Gone are the days when cryptocurrency was just limited to trading; you have way more options to make money on the crypto space than what one could imagine when it all began. While it started with staking, things like NFT trading, swapping, liquidity mining or yield farming, and liquidity pools have become the staple of conversations in the DeFi space.
To ensure that the trade happens in the world of crypto, where everyone wants to sell their asset at the highest possible price, traders always wish to buy/sell their asset at the best price to buy or sell their assets. An Automated Market Maker or an AMM ensures this by providing liquidity for the assets all the time and thus reducing price volatility. Decentralized Exchanges use these computer-generated algorithms or AMMs to set the price of an asset and assist in crypto trading.
Saber, no less than Luke’s lightsaber, serves in more ways than one! It helps users on Solana attain a high capital efficiency with an excellent annual percentage yield.
Before you head to the Saber website and start filling in your details, you need to know what it comprises and how to use it to get the best out of your money. Let me help you find answers to these questions.
Saber and Solana- What is the connection?
If you are not a crypto trading pro already, you might have this obvious question. With Saber, you can only trade with tokens on the Solana Blockchain. Having said this, that does not mean you cannot trade if you have tokens of other Blockchains. You can use stable coins and wrapped tokens with which you can do cross-chain trading on Saber. We will get into the details of how it all works in the latter part of this article.
Coming back to Solana now, the ecosystem host around 400 projects until September 2021. It is a censorship-resistant blockchain, and the projects include several decentralized exchanges such as Saber, stake platforms, lending protocols, digital games, metaverse platforms, storage solutions, etc.
The native currency of the platform is SOL.
Saber became the first DeFi protocol on Solana to reach $4 billion in total value locked in just a few days of its establishment. Its major competitors are Raydium, Curve Finance, Mercurial Finance and Ellipsis Finance, which are all on Solana.
What is Saber?
Saber is a decentralized exchange that facilitates Automated market-making for trading stable coins on the Solana Blockchain. For those who do not know what stablecoins are, these are cryptocurrencies backed by real-world currency. Saber entered the DeFi space by the name of StableSwap in June 2021. The think tank at Saber aimed to build a fast and secure platform ideal for global adoption.
Crypto users back then had to incur a high slippage on swapping the pegged assets or stablecoins on traditional exchanges. This slippage was particularly hefty when the volume of transactions was huge, which is one of the many reasons why StableSwap received a warm welcome.
Also, there was a limitation to trading on crypto tokens that are not on the Solana Blockchain. Saber provided liquidity to conduct such cross-chain trades, providing an exchange for wrapped assets. Wrapped Assets are nothing but the wrapped version of crypto on other blockchains such as Binance, Ethereum, Terra, Bitcoin, and others, to trade on the Solana Blockchain.
The exchange thus enables multiple borrowing and lending options. The crypto traders get to earn the fees on trading by providing liquidity to the liquidity pools or indulging in active liquidity mining through Saber LP tokens. With advanced algorithms, users can save on impermanent loss while withdrawing their money at any point in time.
There are also liquidity incentives or Saber tokens (SBR) that liquidity providers receive in return for depositing the LP tokens received from the liquidity pools.
Saber addressed challenges such as high GAS fees and slow transaction speeds on other DeFi applications. It could do this because the native blockchain of Saber is Solana.
The Solana blockchain can reportedly handle 50,000 transactions per second, much higher than the Ethereum blockchain- only 15 transactions per second. Another reason is the increased network congestion issues on Ethereum due to the number of DApps on the blockchain. The faster transaction speed leads to a high number of transactions, enabling Saber to charge a low cost per transaction.
Over time, the company has partnered with many protocols such as Allbridge, Wormhole, Synthetify, Cashio etc., to provide different liquidity pools to the platform’s users. It has introduced Chainlink Price Feeds as an Oracle solution to provide updated data feeds for prices in the various pools.
If you have, by now, got the hang of what Saber is all about and feel like trading already, I am here to help. Let us run to the website and start with all the practical stuff!
How to Use Saber?
First of all, you need to create a wallet to store your crypto. You can create a Phantom Wallet or any other preferred wallet supported on Saber. If you need help creating the wallet, you can
Read more: How to create a Phantom wallet.
- Visit saber.so. You will see the following page.
- Click on Launch App in the top right corner.
- You need to connect the wallet. Click on the option in the top right corner.
- Now, you need to connect to a wallet that supports Solana tokens, so you need to click on Continue on the dialogue box that appears.
- Here, you need to choose the wallet you want to connect to. There are various choices, but Phantom and Solfare are often preferred options.
- Let us connect to Phantom Wallet as an example.
- As you click on Phantom, you need to enter the password you used while setting up your Phantom wallet and click Unlock.
- Click on Connect. You will need a notification on the bottom left that you have successfully connected the wallet.
There are three main options for trading on Saber. These are Swap, Pools, and Farm. The options are displayed on the main page of the website as soon as you connect the wallet.
Swap: Swap, as the name suggests, lets you swap your existing tokens into tokens you want to buy.
Pools: These are liquidity pools where you can enter your crypto in a particular ‘crypto pair’ or pool and earn passive income from the trading that happens in the pool. You also get LP tokens as you provide liquidity to these pools.
Farms: You can do liquidity mining on Farms using the LP tokens and earn SBR tokens by depositing them. SBR tokens help you get voting power on Saber DAO, using which you can automate decisions on the platform to an extent without needing any intermediaries.
Let us get into the details of how each option works on the Saber platform.
How to Swap?
As you click on Swap, you will see the following screen.
Here there are various options to swap your token. You can pick the token you want to swap, USDC, in the screenshot above. There are many other options, including PAI, MAI, CASH, and many Wrapped tokens that you can swap on the platform. You can check the complete list by clicking on the dropdown against USDC.
You then need to enter the currency you want in return. The value of the corresponding currency, i.e. the currency you want to get with this swap, automatically appears in the section below.
Remember, we said Saber makes use of computerized algorithms to set the price. Now, these algorithms will decide the number of tokens you will get in return. The higher the slippage cost, the fewer tokens you will receive while swapping. However, Saber has received accolades for a low slippage cost compared to early AMMs on Solana such as Raydium.
How to use Liquidity Pools?
For contributing to liquidity pools, you first need to select the pool you want to invest in. Let us show you how you do it.
Go to the Pools section, and pick BTC-renBTC, say, as an example.
Click on the Deposit icon in blue against the pool you want to select; you will see the following screen.
Now enter the renBTC and BTC tokens you want to deposit into this pool. The ratio of the tokens you add will decide the price of the particular pool. We have taken 100 tokens as an example.
After entering the number of tokens, connect the wallet and click on deposit. You are ready to earn some income for adding liquidity to the pool. You will earn income on the trade occurring in that pool based on the number of tokens you have added to the pool.
In a similar way, you can withdraw your tokens from the liquidity pool if you like; for that, you need to go to the withdraw option. You also earn LP tokens for adding liquidity to Saber Pools.
Now, you can use these LP tokens on Saber Farms and earn SBR tokens in return, giving you more privileges on the platform. Well, now, it is time we get the farmer attire and run straight to the Saber Farms!
How to Invest in Farms?
Consider the crypto pool that you invested into as single crypto while investing into farms. You can choose the crypto pair or the LP tokens you have earned and further stake them to get more benefits from providing liquidity into the liquidity pool.
Click on Stake against the crypto pair, and you will be taken to the following screen.
Here you will enter the number of tokens you want to stake in the ‘Your liquidity Staked’ section. The remaining LP tokens that you have will be displayed in the ‘Your unclaimed tokens’ section. Enter an amount, and with this, you have successfully used your LP tokens for farming with your earned ‘yields’.
The gist is that you get to earn twice the amount you invest in the liquidity pools. Interesting, isn’t it?
Before You Go...
Overall, Saber has an intuitive interface that doesn’t take much to learn and trade into. The best part is Saber can be integrated into any Solana-based app, and this flexibility has enabled it to earn more users for itself. Saber looks to have a bright future as it continuously develops new ways to earn customers for itself.
Recently, Saber launched triple yield rewards in the form of LUNA and COW tokens along with SBR tokens by staking LP tokens earned by providing liquidity to the USDC-CASH pool. COW is a recently launched meme coin by Cashio similar to Dogecoin.
We hope more users develop their skills as Crypto traders on platforms such as Saber to get the best of all the crypto ecosystems out there. All of them are busy striking deals with the best DeFi platforms to take the already booming cryptocurrency market to unimaginable heights.