Arbswap locked farming
Locking eligible liquidity provider (LP) tokens can earn higher farming rewards in exchange for a longer commitment of the pool position. Arbswap described flexible and locked farming on Arbitrum One and Arbitrum Nova in its May 24, 2023 pre-TGE overview. The choice depends on the farm’s incentive terms and when you need access to the underlying liquidity.
What Is Committed to the Farm?
The locked asset is an eligible LP token representing a share of a particular pool. Trading in that pool and changes in underlying asset prices continue to affect the position during its commitment to the farm.
Arbswap’s Arbitrum Nova farming guide , published on November 8, 2023, describes providing liquidity before enabling a selected farm and staking its LP tokens. A balance of the underlying tokens or ARBS alone does not establish that LP farm stake.
What Does a Higher Boost Change?
The lock-related increase concerns farming incentives. Pool trading fees and ARBS farming incentives have different bases: fees arise from trades in the underlying pool, while farm incentives depend on an eligible position being staked under the program’s rules. A farming boost does not multiply the deposited LP token balance or establish a fixed return on the position’s total value.
Where a farm pays ARBS, the amount of reward tokens and their market value are separate quantities. A higher token reward can still be outweighed by a falling reward-token price or losses on the underlying pool position. Impermanent loss, the potential shortfall relative to holding the original pool assets separately as their relative prices change, also remains relevant while the LP tokens are committed.
When Can the Position Be Used Again?
The selected farm’s withdrawal conditions determine access to committed LP tokens. Claiming rewards and withdrawing the LP stake are separate actions; the ability to claim an incentive does not establish permission to withdraw the stake. Removing the underlying liquidity from the pool is another distinct action after the LP position is available for redemption.
A flexible farm can suit a need for earlier access, provided that it accepts the relevant LP asset and its withdrawal rules permit that timing. The chosen farm’s terms determine available lock lengths, exact boosts and any early-exit conditions. The general relationship between longer locks and higher rewards supplies no universal unlock schedule or early-withdrawal penalty.
Before Choosing a Lock
- Match the farm’s accepted LP token and network to the position you hold.
- Compare the additional farming incentive with the period for which the LP stake is committed.
- Check withdrawal eligibility and reward-claim timing separately, including any documented early-exit conditions.
- If you need access before expiry, check whether a permitted early exit or an eligible flexible farm meets that timing.