Element Finance Airdrop Review: Users Who’ve Traded a Minimum of $500

About Element Finance

Element Finance Airdrop is a protocol that enables users to seek high fixed yield income in the DeFi market. Users can access, via the ecosystem and existing AMMs at a discount without being locked into a term, allowing the exchange of the discounted asset and the base asset at any time.

As already guessed in retroactive airdrop overview, Element Finance is airdropping 10% of the total supply to various early users of the platform. Users who’ve traded a minimum of $500, provided liquidity worth at least $500 for 90 days and users who’ve minted more than $10k worth are eligible for the airdrop. Element Discord community members & Ethereum ecosystem contributors on GitHub are also eligible for the airdrop. The snapshot was taken on March 1st, 2022. Eligible users have until an year to claim the airdrop.

Grow your savings

When you purchase Element Finance Airdrop Principal Tokens, you receive a fixed rate token that you buy and hold until the day of the term end date. Once this term has ended, you have the ability to redeem your token and earned APR. Our Principal Tokens have no minimums and no penalties. You can trade your Principal Token back for it’s base asset at any time.

Build on Element

Develop new defi products with the Element SDK. Whether it’s a new feature that you want to build on top of Element or a completely new product, we love to see our community utilizing SDK.

Grow Your Capital for Your Company

Element is the perfect treasury diversification solution allowing Protocols, DAOs, and organizations to earn fixed rate yield on treasury capital while maintaining the ability to exit if needed.

The Element Approach

The Element Finance Airdrop Protocol, at its core, works by enabling users via the Ethereum contracts to split the base asset (ETH, BTC, USDC, DAI) of yield generating positions, such as a Yearn vault or an ETH2 validator, into two separate, fungible tokens: the Principal Token (PT), and the Yield Token (YT).

The splitting mechanism allows users to sell their principal at a discount, thus giving users the ability to create a marketplace for fixed rate income positions. Their principal is no longer locked up and they may use their newly freed funds to leverage at high multiples, gaining increased exposure to yield without the typical liquidation risk.

Users may also gain additional trading fees or APY on their yield positions by using their new tokens to provide liquidity into an AMM. The casual user subsidizes the DeFi user’s active strategies by securing fixed rate yield at a discount on what the DeFi user earns. The DeFi user’s participation subsidizes the value of the fixed rate yield.

Glossary Definitions

• Principal Tokens (PTs): The token representing the user’s deposit value into the Element Protocol. These tokens are redeemable 1-for-1 for the underlying asset at maturity.
• Yield Tokens (YTs): The token representing the variable yield gain over the term period for the deposited underlying asset.
• Principal Reserves: The number of PTs staked in a pool pairing of the base asset and the PT. For example, the number of eP:yETH staked in the pool pairing of ETH/eP:yETH.
• Base Asset: The asset deposited into the Element Protocol (BTC, ETH, USDC, or DAI).
• Base Asset Reserves: The number of base assets staked in a pool pairing of the base asset with the PTs of said base asset. For example, the number of ETH staked in the pool pairing of ETH/eP:yETH.
• Time Stretch Parameter: A parameter used in the trading curve that affects the price discoverability, fees, and liquidity provision ratio of the base asset to PTs.

Yield, Fixed Yield, and Stability

In today’s market, the current variable yield positions available fluctuate constantly, frequently changing day-to-day. In a single week, a variable position that may have carried 20% APY on Tuesday may only carry 5% on Thursday. This constant fluctuation forces current DeFi users to constantly monitor the market and move their capital to different yield positions in order to maintain their desired APY.

Casual users or institutions managing large amounts of capital may not have the bandwidth or the understanding of the space and its associated risks to constantly manage and monitor their capital. Additionally, these users may not want to deal with the complexities surrounding taxes or the risks associated with new protocols being released. For these users, securing a fixed rate of income is both helpful and more appealing, allowing them to not have to actively manage their positions.

AMM Liquidity Provision

If a user is already looking to gain exposure to BTC or ETH for a period of time, it makes sense to gain that exposure at a discount. During the period of holding the discounted ETH, the user may provide liquidity for the PTs on an AMM, gaining a significant boost on their fixed rate yield via trading fees. 

Principal Tokens as a Trading Instrument

Element Finance Airdrop From the perspective of a swing trader who enters positions ranging from periods of 1-2 weeks up to a calendar month, PTs make for a better form of trading instrument generating a higher rate of return without incurring added trading risks.

Spot Trading

Assuming the following parameters:

• Annual Fixed Rate Yield*: 10%
• Asset Being Swing Traded*: 1 Month, ptBTC
• Current Price of BTC*: $50,000
• Price Target of BTC in Trade*: $55,000
• Trade Duration*: 1 Month
• USD Amount in Trade*: $200,000