How to Deposit Liquidity on Bug Bounties with Hats Finance
Hats Finance offers a revolutionary way forward for users to enhance security while earning rewards. By depositing funds, community members help secure the platform and enjoy attractive Annual Percentage Yields (APY). This model combines secure fund management with incentives, making security a shared community effort.
With Hats Finance, users both protect and benefit, bringing security closer to the community and building trust across protocols.
This brief tutorial will help you navigate and understand the exciting Bug Bounty vaults of Hats Finance.
But first, let’s understand the motive behind the APY Bug Bounty vaults.
Concept of APY on Bug Bounty Vaults
The primary idea behind offering APY on Bug Bounty vaults is to attract individuals with a high-risk appetite to secure the protocols. This provides peace of mind to users who wish to utilize these protocols without risking their principal. By depositing funds into Hats Finance vaults, users contribute to the security of the protocol while getting potential rewards, thus creating a mutually beneficial ecosystem.
At Hats Finance, we are committed to this vision by fostering a community of users and white-hat hackers to strengthen the Web3 ecosystem’s security.
This presents retail investors with a golden opportunity to invest in Decentralized Security (DeSec), which aims to create a transparent and secure WEB3 space, free from fraud and scams, with projects that prioritize user safety.
Please note that only v2 and v3 bug bounty vaults containing > 10K USD worth of tokens will benefit from APY and Hats Points allocations. Make sure you select the right vaults to earn your rewards!
Part 1: Getting Started with Hats Finance
To get started, simply click the link: Hats Finance
Take the following steps after reaching the landing page.
Step 1 — Accessing the Platform:
- Click on the “App” button on the top right corner of the Hats Finance website landing page.
Step 2 — Navigating to Bug Bounties:
Upon entering the app, select the “Bug Bounties” button on the dashboard. Scroll down the page to explore the various options available.
Step 3 — Exploring Bug Bounties:
Scroll down to find Bug Bounties and various projects listed for depositing liquidity. Click on the “Bounty details” button to view the details of the specific bug bounty.
Step 4 — Reviewing Project Details:
- After clicking the “Bounty details” page — you will be able to view all the necessary details for the bounty, including any previous bug submissions and payouts.
- Before making a decision, users are encouraged to check the details of each project, such as APY, Total Deposits, and Maximum Rewards, and to research and review the project itself.
Once you select the right project, you can deposit your LP tokens into it. Let’s look at the simple steps to follow.
Please Note: APY fluctuates according to supply and demand principles. This is not financial advice; users are expected to do their own research before depositing liquidity.
Additionally, APY is only available upon TGE — thus, do not be alarmed if you haven’t seen it on our UI/UX yet!
Part 2: How to Deposit Liquidity
Initiating a Deposit
Initiating a deposit in Hats Finance is straightforward and compatible with all types of wallets on the mainnet network. Follow these steps:
1.Connect Your Wallet: Connect your preferred wallet to the Hats Finance platform.
2. Prepare Your Bug Bounty Tokens: Ensure that the right tokens are available in your wallet. In this example, it is erc-20 USDC that will be used for the deposit.
3. Enter Deposit Amount: Specify the amount you want to deposit, review the terms of use, and click on the “Deposit” button.
4. Confirmation: A success notification will appear once the transaction is confirmed on the blockchain.
Part 3: How to Withdraw Liquidity
Initiating a withdrawal is straightforward. Follow these steps to withdraw your assets easily.
Step 1: Access the Vault Dashboard
Navigate to the vault dashboard, where you can see your assets.
Step 2: Submit a Withdrawal Request
- Locate the assets you want to withdraw.
- Confirm the details and click on the option to submit a withdrawal request.
Step 3: Transaction Confirmation
- Approve the transaction on your wallet. Wait for the transaction to be processed.
- You will receive a confirmation message once the transaction goes through.
Step 4: Waiting Period
- Your withdrawal request will be pending for 7 days.
- This waiting period is a security measure to prevent front-running payouts.
Step 5: Complete the Withdrawal
- After the 7-day waiting period, you can proceed with the withdrawal.
- You have another 7-day window to complete the withdrawal process.
- Follow the prompts to finalize and receive your assets.
Why do we have a 7-day waiting period?
The 7-day waiting period is a protective measure to prevent front-running payouts. As Hats incentivises taking risks for participating in payouts and not only adding liquidity while no payout is initiated.
Earning Rewards
By depositing tokens, users can be rewarded proportionally based on their deposits and the duration of their commitment. These rewards accumulate automatically.
Vault Assets
Deposited tokens are managed within the vault to maximize security and yield. For example, a user depositing USDC into the vault will see it reflected in their vault assets, and associated rewards will accrue over time.
Risk and Reward Mechanism
Investing in liquidity carries its own set of risks, but with thorough research and understanding, it can yield significant profits. Let’s look at both parameters.
Growing the Bug Bounty
Depositing in Hats vaults contributes to the Bug Bounty of the associated project. Users should be aware that their deposits could be used for payouts if a security vulnerability is found.
Risk Parameters
Each vault has a maximum reward parameter (e.g., 5–90% per payout) that limits depositors’ risk exposure.
The Hats Finance $HAT vault that will be launched upon TGE will have a 10% payout exposure per payout, while other vaults may have up to 90%. Please monitor your position actively and understand the risks before depositing liquidity in a vault!
Research and Trust
Users are encouraged to research protocols thoroughly, looking for projects that have undergone extensive security reviews and audit competitions. This due diligence can help build trust in the project’s codebase, though it’s important to acknowledge that even well-audited projects can be hacked.
Annual Percentage Yield (APY)
Understanding APY
APY represents the rate of rewards on a deposit. In the context of Hats Finance, the APY is a metric that helps users understand the potential returns on their deposited tokens over a year.
Features
- High Yield Opportunities: Hats Finance offers APYs to incentivize users to participate in securing the platform.
- Variable Returns: The APY can vary based on multiple factors, including the overall performance of the vault, the amount of assets deposited, and the distribution of rewards between vaults.
Security Measures
Seven-Day Withdrawal Period
To enhance security and prevent front-running payouts, Hats Finance implements a 7-day waiting period for withdrawals. This precautionary measure ensures that the system remains robust against potential exploitation.
Accruing Interest
Over time, the deposited USDC accrues rewards at the specified APY rate. The platform continuously updates the user on their accumulated rewards and the current APY. Please note that APY is still subject to fluctuation and users should still monitor their positions closely.
Withdrawals
If the user decides to withdraw their funds, they must submit a withdrawal request, triggering a 7-day waiting period. After the waiting period, the user can complete the withdrawal within the following 7-day window.
Reward Programs
Allocation Points
The allocation points assigned to each vault gauge the rewards per vault. The initial reward program will use HAT tokens.
Multiple Reward Controllers
Vaults support multiple reward controllers, allowing for diverse reward options. For instance, an ecosystem reward controller might be used to attract more funds to secure protocols within that ecosystem, potentially offering different types of rewards on a single asset deposited.
You Are All Set!
With all the necessary knowledge, you are set to start depositing bounties on Hats Finance, which offers attractive rewards according to project performance.
Join the Hats Finance community to stay updated about advancements in DeSec and the exciting things coming at Hats Finance.
