There is more detailed information on the programs I describe below here.
Sumero is an open protocol that will allow anyone with an internet connection and a cryptocurrency wallet to participate. In the future anyone will be able to create any type of derivative or synthetic asset they wish using Sumero. In the beginning however, the protocol will launch with 20 synths and liquidity mining programs to distribute the currency and reward early adopters that provide a useful service to users of the dApp. This process is also entirely open. Anyone is free to participate in one, some or all of these programs.
First of all, those wishing to participate will need to buy either ether (ETH) or USDC at a cryptocurrency exchange. You will then need to install Metamask in your browser and send the cryptocurrency from whichever exchange your bought it on to this wallet. You must then connect your Metamask wallet to Sumero in order to interact with it.
Please note that Ethereum is still a nascent technology and very much a work in progress in terms scaling to meet increasing user demand. As a consequence, transaction fees can be very prohibitive at times. If you are not a regular trader, it is recommended to choose a strategy that involves as few alterations and ergo Ethereum transactions as possible.
I will outline the various ways to earn CLAY below beginning with the program that requires the fewest transactions and least complexity.
The easiest way to participate in the Sumero system is to simply buy CLAY. Although there is no central issuer of CLAY, many liquidity mining participants will need to sell some CLAY to meet expenses. There will almost certainly be CLAY available to purchase on SumSwap (Sumero’s native exchange).
Lending mining (zCLAY bonds)
Service: Counter some of the short-term cyclical movements in the value of CLAY
Process: Lend CLAY to the protocol for 2-3 years & receive zero-coupon zCLAY bonds in return
Risk: Sumero might not be successful and the value of CLAY will decline
Reward: 60% imputed APY denominated in CLAY
Eg: Lend 100 CLAY to the protocol on first day of the bond offering and receive 280 zCLAY that can be redeemed for 280 CLAY upon maturation of the bonds three years later (100 CLAY loan plus 180 CLAY in interest calculated from 60% APY x3)
This program will not open until one month after the other program has begun as there needs to be supply of CLAY for people to lend. People can either engage in the liquidity mining protocols before this program starts in order to earn CLAY to lend or buy CLAY from liquidity miners on the Sumero exchange. Further details of the rewards schedule can be found here.
Service: Creating synthetic assets and funding liquidity pools for these assets
Process: Stake collateral (either USDC or ETH) and receive a synthetic asset I return. Pool that synth with ETH or USDC and receive a liquidity provider (LP) token in return. Stake this token to earn liquidity mining rewards.
Risks: The price of the synth may rise relative to the collateral asset staked to such an extent some of the value of your position is liquidated. Movements in the relative price of assets in the pools can lead to impermanent loss.
Reward: Receive a percentage of the CLAY issuance allocated to this service. APY is dependent on the amount of competition in the market.
Eg: Stake 1 ETH and mint 0.8 ETH’s worth of APPL (Apple stock synthetic asset) – over-collateralised by 20%. Pool this APPL with USDC and receive an APPL-USDC LP token. Stake this LP token and earn CLAY for as long as it is staked.
We offer up a choice of two types of collateral, ETH and USDC for people to choose between when minting. ETH is less stable but is currently experiencing a bull market so those using it can take advantage of price rises in it while also earning CLAY on top of these profits. USDC carries less volatility risk and is also far more suitable for minting assets in a cryptocurrency bear market. If one wishes to use ETH as collateral, they need to wrap it first here.
Once the user has minted an asset, they will need to provide liquidity to a liquidity pool along with USDC. You can purchase USDC on the Sumswap exchange or the exchange you first deposited to from your bank account.
When you fund a pool you will receive a LP token. You then need to stake this token in order to receive your liquidity mining rewards for as long as it is staked.
If/When you want to want to cease liquidity you unstake your LP, withdraw liquidity from the pool and then burn the synth and reclaim your collateral by closing your position on the Mint page.
Service: Ensuring wide stakeholder involvement in protocol changes by actively participating in governance
Risk: The value of CLAY might decline
Reward: Receive 100 CLAY each time you vote for the first year of the protocol’s existence.
For a DAO to be decentralised, it’s important that there are as many people involved in decision making as possible. In order to incentivise this global cooperative, Sumero will reward those that participate. Once you own CLAY or zCLAY you can vote in any poll and receive a further 100 CLAY in reward.
I will add screenshots of the app to this page to walk people the process when the app is finished.