Providing USDC to the reserve pool is one of the crucial actions performed in Tidal Finance protocol. It offers a great opportunity for providers to earn premium and $TIDAL tokens in exchange for undertaking the risk of potential claim payout. In addition to the $TIDAL tokens rewarded, 90% of the premium paid by the cover buyers are allocated to the reserve providers.
USDC needs to be held in metamask on polygon network to participate in USDC reserve pool. How to transfer token from ethereum to polgyon please refer to "Transfer Token to Polygon" section.
To provide reserve, users must first deposit USDC into the Pending Deposit which will not become immediately effective until the beginning of next epoch (or week). Users are free to change the amount in their Pending Deposit until their pending deposit is added into My Reserve which represents their pro rata shares in the leveraged reserve pool.
First, you need to approve the deposit action if this is your first time depositing USDC. Click the “Deposit” button on the Provide Reserve Page and click “Approve” on the pop-up window. Click “Sign” on the pop-up Metamask window, and Biconomy will handle the rest with no need for you to pay the transaction fees.
After the approval, you can deposit the desired amount of USDC into your Pending Deposit. Click the “Deposit” button, enter the amount you’d like, and click “Update”.
Step 2: Select Protocols in Basket
After depositing USDC in their Pending Deposit, users must also select protocols in the Basket. Doing so, users elect to provide coverage for the selected protocols and receive the premium in return. Failure to do so will prevent users from earning the premium for their deposited reserve. On the other hand, the more protocols a user selects, the bigger risks she assumes, and the higher APR she benefits.
First, click the "+" sign button under the Current Basket. Then, click the "stake" button for each protocol that you'd like to provide coverage for. Click the "Update" button to call the Metamask pop-up window. Click “Sign”, and Biconomy will handle the rest with no need for you to pay the transaction fees.
It is important to understand your Pending Deposit won’t become immediately effective. On one hand, you need to wait until the beginning of the next epoch of the insurance policy (or next week) to begin to earn the premium and $TIDAL reward. On the other hand, you will not immediately assume the risk of the current insurance epoch, and thus you can still reduce or increase the amount of USDC you will dedicate to the reserve pool.
For the same reason, the selected protocols in your Basket won’t become immediately effective until the beginning of the next epoch. During this pending period, you can keep adjusting and updating the “basket” of the protocols you’d like to provide coverage for.
With TIDAL’s initial launch, early Reserve Provider adopters will get weekly rewards by depositing USDC into the cover pool. Up to $27,000 USD value of TIDAL tokens (~4,500,000 TIDAL at price $0.006) will be distributed on a weekly basis across the mutual pool, accumulating to an approximately 170% APR for the 1 million USDC provided by Reserve Providers. Reward incentives could be adjusted to maintain the healthiness of the reserve pool.
The USDC Reserve deposit stays in the discretionary mutual pool at a period of the reserve provider's discretion. Withdrawal takes upto 14 days to become effective in your wallet. During the pending period, reward is still being earned on a weekly basis.
Loss of principal in case of payouts - The reserves will be used to compensate losses incurred by cover purchasers in case of a hack event in the respective covered protocol. Such payouts might use up a fraction to 100% of your deposits. Tidal makes no representation on the security of the protocols it offers to be insured. Cover providers must do their own due diligence and understand the risks associated with covering protocols they chose to provide cover for.
For other risks please refer to the risk section on gitbook.