Liquidity Farming - Whitepaper

USDC Liquidity Farming is an innovative decentralized finance (DeFi) yield farming model designed to provide users with a non-custodial, low-risk, and highly liquid way to earn yields. Unlike traditional Yield Farming, this project does not require users to deposit assets into the platform or lock funds. Instead, users retain USDC in their own wallets, and the platform interacts with external protocols via smart contracts to generate yields, which are directly returned to the user's wallet. The platform employs diversified strategies (such as lending, stablecoin pool optimization, and cross-pool arbitrage) to provide users with stable and predictable returns. Users maintain full control over their assets and can withdraw funds at any time, ensuring liquidity and security. This project aims to promote the democratization of DeFi, with a goal of achieving $100 million in Total Value Locked (TVL) and 500,000 active users by 2025, becoming a benchmark in the stable yield sector.

Since the emergence of Ethereum's smart contract ecosystem in 2017, decentralized finance (DeFi) has become one of the most revolutionary applications of blockchain technology. By eliminating traditional financial intermediaries (such as banks and brokers), DeFi provides global users with open, transparent, and permissionless financial services. As of March 2025, the total value locked (TVL) in the DeFi ecosystem has exceeded $100 billion, covering areas such as lending, trading, derivatives, and yield farming. The core of DeFi lies in leveraging blockchain and smart contracts to enable automated and efficient financial operations while giving users full control over their assets.

Yield Farming, one of the core mechanisms of DeFi, was first introduced by Compound in 2020, distributing governance tokens to liquidity providers as incentives. Subsequently, projects like Uniswap and Curve further advanced this model. However, traditional Yield Farming typically requires users to stake assets (such as ETH or other tokens) into liquidity pools to earn returns. While this model offers high yields, it also comes with significant risks, including impermanent loss, smart contract vulnerabilities, and market volatility.

This project—USDC Liquidity Farming—aims to revolutionize the traditional Yield Farming model by introducing a non-custodial, USDC-based yield farming mechanism. Users retain their assets in their own wallets, ensuring full control over their funds, while the platform interacts with external protocols via smart contracts to generate stable yields. By lowering the barrier to entry, eliminating impermanent loss risks, and ensuring liquidity and security, we aim to provide users with a simple, efficient, and stable way to earn yields. USDC, a USD-pegged stablecoin issued by Circle, is an ideal choice for this project due to its high liquidity and widespread acceptance.

• Reduce Risk: By not requiring asset staking, we eliminate impermanent loss and lock-up risks.
• Enhance Flexibility: Users keep USDC in their own wallets, maintaining full control and liquidity.
• Stable Yields: Leverage the stability of USDC to provide predictable yield sources.
• Expand Participation: Attract more traditional finance users into the DeFi ecosystem.

Traditional Yield Farming typically requires users to deposit assets (such as ETH and USDT) into liquidity pools to support decentralized exchange (DEX) trading. These assets need to be paired in specific ratios, but when market prices fluctuate, the value of assets in the pool may be lower than if held individually, a phenomenon known as impermanent loss. For example, if a user provides ETH/USDT liquidity on Uniswap and the price of ETH surges, they may lose some potential gains. This risk is particularly threatening to novice users.

Many DeFi protocols require users to lock their assets for a period (e.g., 30 days or more) to earn higher annual percentage yields (APY). This not only limits liquidity but also makes it difficult for users to respond to sudden market events. For example, during the Terra/LUNA collapse in 2022, many users with locked assets were unable to withdraw in time, resulting in significant losses.

Traditional Yield Farming involves complex processes, including wallet connections, token pairing, staking, and token swaps. For non-technical users, understanding APY, APR, liquidity pool rules, and the value of governance tokens is a significant challenge. Additionally, frequent high gas fees (transaction costs on the Ethereum network) further increase participation costs.

DeFi protocols rely on smart contracts, and code vulnerabilities can lead to funds being stolen by hackers. For example, the Poly Network hack in 2021, which resulted in over $600 million being stolen, highlighted the fragility of smart contract security. Additionally, if the underlying blockchain (such as Ethereum) experiences congestion or forks, user assets and yields may also be affected.

Traditional Farming yields are often tied to market supply and demand and token prices, resulting in high volatility. For example, some protocols initially offer APYs as high as 1000%, but as more users join and tokens inflate, yields quickly decline. This unpredictability makes it difficult for users to plan long-term investments.

USDC Liquidity Farming is an innovative DeFi yield farming model where users do not need to stake or deposit assets into the platform. Instead, they simply hold USDC in their own wallets, and the platform interacts with external protocols via smart contracts to generate yields, which are directly returned to the user's wallet. The platform employs diversified strategies (such as lending, arbitrage, and stablecoin pool optimization) to provide users with stable and predictable returns.

1. Funds are held in the user's wallet: Users hold USDC in their own crypto wallets (e.g., Trust Wallet) without transferring them to the platform.
2. Wallet signature authentication: Users authenticate their participation in yield generation through wallet signatures.
3. Yield generation: The platform interacts with external protocols via smart contracts to generate yields, which are directly returned to the user's wallet.
4. Yield distribution: Yields are distributed daily in USDC to the user's wallet.
5. Exit at any time: Users can stop participating or transfer USDC at any time without exit fees or penalties.

• Zero Impermanent Loss: Since there is no asset pairing or liquidity pool, users do not need to worry about losses due to market fluctuations.
• Full Control: Funds remain in the user's wallet, eliminating the risk of platform insolvency or hacks.
• High Liquidity: Users can transfer or use USDC at any time to meet sudden needs.
• Low Barrier to Entry: Only signature authentication is required to participate, with no complex operations.
• Stable Returns: Based on the USD peg of USDC, yields are denominated in stablecoins, avoiding token price volatility risks.

USDC Liquidity Farming operates on the Ethereum network, leveraging its mature smart contract ecosystem and widespread support for USDC. Future plans include integrating multi-chain architectures (such as Polygon, BSC, and Arbitrum) to reduce transaction costs and improve efficiency.

The platform's smart contracts are divided into the following modules:

• Authentication Contract: Receives user wallet signature authentication and records participation amounts. Users can revoke authentication at any time to ensure fund security.
• Yield Generation Contract: Interacts with external protocols via signature authentication to generate yields, which are directly returned to the user's wallet.
• Distribution Contract: Calculates and distributes yields daily to the user's wallet. All yield records are on-chain and can be verified via a blockchain explorer.
• Exit Mechanism: Handles user requests to revoke authentication, ensuring immediate response.

The platform employs the following diversified strategies to generate yields while ensuring user funds remain in their wallets and are not transferred:

• Lending Yields: The platform interacts with lending protocols like Aave or Compound via smart contracts. User funds in their wallets participate in lending markets through signature authentication, earning stable interest (approximately 2%-5% APY), which is directly returned to the user's wallet.
• Stablecoin Pool Optimization: The platform interacts with stablecoin pools on DEXs like Curve or SushiSwap via smart contracts. User funds in their wallets participate in liquidity provision through signature authentication, earning trading fee shares, which are directly returned to the user's wallet.
• Cross-Pool Arbitrage: The platform monitors price differences for USDC across different protocols via smart contracts. User funds in their wallets participate in low-risk arbitrage through signature authentication, earning profits from price differences, which are directly returned to the user's wallet.
• Liquidity Management: The platform optimizes fund allocation strategies via algorithms. User funds in their wallets participate in the highest-yielding strategies through signature authentication, with yields directly returned to the user's wallet.

USDC Liquidity Farming addresses the pain points of traditional Yield Farming through its innovative "non-custodial, funds-in-wallet" model, providing users with a low-risk, highly liquid, and stable way to participate in DeFi.

As the DeFi ecosystem continues to evolve, USDC Liquidity Farming aims to become a leader in the stable yield sector. We plan to enhance the platform's yield capabilities and user experience through technological upgrades, product optimization, and multi-chain support.

The platform will develop a comprehensive crypto asset trading system that integrates with the liquidity farming mechanism, allowing users to seamlessly trade and farm with their assets while maintaining full control over their funds.

The project will evolve into a comprehensive DeFi mining financial platform, offering a range of yield-generating strategies while maintaining the core principles of non-custodial asset management and user-centric design.

To maintain the transparency, stability, and fairness of the mining pool, members must adhere to the following arbitrage rules:

• Strictly comply with the mining pool membership agreement and recycling rules. Any violation of the agreement is illegal and will be severely punished.
• Prohibit arbitrage using information asymmetry. Members are prohibited from engaging in insider trading or exploiting information for personal gain. Violations will result in severe penalties.
• Carefully review release and recycling applications. Members must carefully review miners' release and recycling applications, especially large ones. If arbitrage is suspected, it must be reported to the pool manager immediately, and necessary measures must be taken.
• Prohibit USDC transfers between members for arbitrage. If such behavior is detected, severe penalties will be imposed.
• Prohibit market manipulation. Members are prohibited from manipulating the market in any form, including false advertising and short-term trading using ETH price fluctuations. Violations will result in legal penalties.
• Strictly adhere to risk control principles. Members must follow risk control principles, including diversified investments, reasonable miner allocation, and risk reduction, to ensure the pool's safety and stability. Excessive risk-taking or poor risk control may lead to disputes.
• Establish a comprehensive regulatory system. To ensure good cooperation, mutual supervision, and self-discipline among members, especially regarding potential arbitrage in transactions, a comprehensive regulatory system must be established. The pool management department is responsible for enforcing the system and ensuring strict rule compliance.

Dear Pool Users: To protect your rights, we have established the following liquidity mining pool rules:

1. Prohibit converting USDC to ETH during airdrop rewards. USDC cannot be converted to ETH, even if the trade is profitable.
2. Pool members are prohibited from sending USDC to each other for arbitrage. Violations will result in severe penalties.
3. If users violate Rule 1, the following penalties will apply:
   • Deduct the corresponding airdrop reward amount.
   • For repeated or malicious violations, users will be banned from the pool.
   • In severe cases, users will be naturally eliminated from the pool, and all airdrop rewards will be deducted.
4. After the ban period for Rule 1 ends, we will restore the user's USDC amount, deduct transaction fees, freeze the violator's assets, and deduct airdrop rewards.
5. During the airdrop event, you cannot have any ETH in your wallet, as this will conflict with the ETH reward and cause the reward to fail to be issued. Serious consequences may cause you to lose the opportunity to participate in this airdrop event.

Notes:

• The enforcement of these rules may involve special circumstances, conditions, or changes, which will be communicated to pool users in advance via announcements or other appropriate means.
• Non-compliance with pool rules may harm your rights. Please proceed with caution.
• We are committed to maintaining the fairness and transparency of the pool and hope all users will work together to ensure its stable operation. If you have any questions or suggestions, please contact our support team.