『 Scallop: Could it be the next Pendle? 』 Scallop @Scallop_io is one of my favorite protocols in the SUI ecosystem. To discuss SUI yield strategies, we must first talk about Scallop. Although its mechanism is not quite the same as Pendle, Scallop gives me the early Pendle vibe ~ Trust your intuition (I mostly entered Pendle at $0.5). 1️⃣ Scallop vs Pendle Comparison 🔹 Scallop's market cap is 1/40 of Pendle; TVL is 1/20. 🔹 Scallop's token "lock-up rate" is similar to Pendle, but here's the key point: the average lock-up period for Scallop tokens is 3.7 years, while Pendle is only 1 year. What magic does Scallop have that makes users willingly lock up for an average of 3.7 years? (We'll talk about this later) 🔹 In the past 30 days, fee revenue for Pendle was 900k, while Scallop was 1.45m, slightly higher than Pendle. // 2️⃣ Attractive Aspects of Scallop's Mechanism The core gameplay of Scallop is to purchase $SCA, lock it into veSCA, and then significantly boost yields (I think it's worth buying). Benefits of locking veSCA: 1. Loyalty Program: Depending on the amount and duration of veSCA locked, airdrops are given periodically, though the current yield is not much. 2. Referral Program: When others use your link, they get a discount on borrowing fees; you also receive a portion of the borrowing fees. Feel free to use my link: 3. Yield Enhancement ⭐️⭐️⭐️ This is the key point, the core gameplay 🔥 This is why everyone is willing to lock up for 3.7 years. Example: You deposit money into Scallop and borrow USDC. The borrowed money can earn rewards, which are higher than the interest. Suppose you lock 100,000 veSCA for 4 years. Borrow $20,000, APR reward can be up to 4x (maximum) = APR 40% Borrow $50,000, APR reward 3x = APR 30% Borrow $100,000, APR reward 2x = APR 20% PS: APR is variable. (All the above are APR after deducting interest, the more veSCA you stake, the larger the amount you can boost) ✅ Key Point~ Key Point ~Key Point "Different lending pools have different boost conditions" You can try to allocate loans to maximize yields. For example: USDC reward APR for the amount you borrow has reached the maximum of 4x, but there is still room to borrow, borrowing more will decrease the reward multiplier, however, you can borrow from different stablecoin pools USDY / FDUSD / USDT to maintain the reward APR at 4x. Additionally, there are SUI / ETH / WAL lending pools that can be played this way. ✅ Key Point~ Key Point ~Key Point ~Key Point The money you borrow Can be layered again, staked in other protocols to earn an annual yield of 7% ~ 20% PS: The image below shows the top 3 whales. He can achieve an APR of nearly 60% just in Scallop 🔥 // 3️⃣ Precautions for Using Scallop 🔹 Scallop has been out for about a year, not yet tested by long-term risk resistance. 🔹 Only 40% of $SCA tokens are unlocked, 60% are still not circulating. 🔹 $SCA token price has increased by 100% in the past month. 🔹 SUI ecosystem rewards subsidies are only until the end of this year, whether there will be reward subsidies next year to make APR so attractive is unknown ~ // 4️⃣ My Thoughts I am optimistic about the SUI ecosystem because my experience with several protocols has been pleasant. SUI is actively developing both internally and externally. Scallop's mechanism is very appealing to me, and the big players I know strongly recommend it. It has actual fee revenue, and even if there are no SUI subsidy rewards in the future, it has the ability to generate revenue and share it with users. In the future, it might create a flywheel effect, replicating Pendle's legendary price surge from the bottom. This article introduces Scallop. In the next article, I will write about: Scallop combined with other protocol yield strategies.