The problem with earning yield on Bitcoin
Traditional AMM liquidity provision forces you into a trade-off: earn fees, but expose yourself to impermanent loss when asset prices diverge. For Bitcoin holders, this creates a frustrating situation where a 40% BTC rally might leave you with less BTC than you started with.
Chainflip's Boost pools solve this by letting you deposit BTC (and only BTC) to earn swap fees. No paired assets. No IL exposure. Your deposit stays denominated in the asset you deposited.
But how does this actually work? And what returns can you realistically expect compared to traditional LP positions?
How single-sided deposits eliminate impermanent loss
Impermanent loss occurs when you provide liquidity to a two-asset pool and the price ratio between those assets changes. The AMM rebalances your position, and you end up with more of the depreciating asset and less of the appreciating one.
Boost pools sidestep this entirely. When you deposit BTC into a Boost pool, you're not providing liquidity to a BTC/USDC pair or any other combination. You're depositing BTC into a single-asset pool that earns fees by accelerating incoming swap deposits.
Here's the mechanism: when someone initiates a swap into Chainflip, there's a confirmation period before their deposit is recognized. Boost pools front this capital, allowing the swap to execute immediately. In exchange, Boosters earn a fee from the swapper.
Why there's no IL in this model
Because Boost pools don't maintain a price ratio between two assets, there's no rebalancing mechanism that could cause IL. If you deposit 1 BTC and BTC doubles in price, you still have 1 BTC (plus the fees you've earned). If BTC drops 50%, you still have 1 BTC (plus fees).
Your exposure is solely to BTC price movement itself, which you'd have anyway just by holding BTC. The yield you earn is purely additive.
The yield calculation mechanics
Boost yield comes from two sources: the fee tier you select, and the volume of swaps that flow through your selected tier.
Each Boost pool has multiple fee tiers (e.g., 5 bps, 10 bps, 30 bps). Lower fee tiers get filled first because swappers prefer cheaper options. Higher fee tiers earn more per swap but fill less frequently.
Worked example: 30-day Boost returns
Let's model a 1 BTC deposit into the 10 bps tier with realistic assumptions.
Assume the BTC Boost pool processes $50M in swap volume over 30 days, and your tier captures 30% of that volume ($15M). At 10 bps (0.1%), you'd earn 0.001 × $15,000,000 = $15,000 in fees across the entire tier.
If total deposits in your tier equal $500,000 (about 7.5 BTC at $67,000/BTC), and you deposited 1 BTC ($67,000), your share is 13.4%. Your 30-day earnings: $2,010 or roughly 0.03 BTC.
That's a 3% return in 30 days, or approximately 36% APY. Your 1 BTC becomes 1.03 BTC. If BTC rose 20% during this period, a traditional 50/50 LP might have experienced IL that eroded those gains. Your Boost position captured pure fee yield on top of the price appreciation.
90-day comparison: Boost vs traditional AMM
Scaling the same assumptions over 90 days with a volatile BTC price (let's say BTC rises from $67,000 to $95,000, a 42% increase):
Traditional AMM LP (BTC/USDC, 50/50): You'd earn swap fees, but with a 42% price divergence, IL would be approximately 4.2% of your position value. If fees earned were 8% over 90 days, your net gain is roughly 3.8% after IL.
Boost position: Using the same volume assumptions (0.09 BTC earned over 90 days), you'd have 1.09 BTC. At $95,000/BTC, that's worth $103,550 compared to your initial $67,000. Total return: 54.5% (42% price appreciation + 9% fee yield + compounding effects).
The AMM LP would show roughly $99,500 in value after IL, meaning you'd be $4,050 better off with Boost in this scenario.
Addressing the "no IL" claim honestly
When we say Boost has "no impermanent loss," we're being precise about what IL means technically. IL specifically refers to losses from AMM rebalancing when asset price ratios change.
What Boost doesn't protect against
Boost doesn't protect you from BTC price drops. If BTC falls 30%, your Boost position falls 30% too (minus the fees you've earned). This is asset price risk, not impermanent loss.
Boost also doesn't guarantee any specific yield. If swap volume through your tier drops, your returns drop. The protocol's overall volume trends directly affect Boost returns.
What makes this different from other "IL-free" claims
Some protocols claim IL protection through insurance mechanisms or rebates. Boost doesn't use these. It structurally cannot produce IL because there's no second asset to create a price ratio. This isn't a feature bolted on. It's inherent to the design.
Who benefits most from Boost
Boost is particularly suited for Bitcoin holders who want yield but refuse to take on paired-asset exposure. If you're bullish on BTC and would hold it regardless, Boost lets you earn fees on that conviction without diluting your BTC exposure.
It's less suited for yield maximizers who are comfortable with IL risk and want to chase higher APYs. Traditional AMM positions can sometimes outperform Boost in low-volatility, high-volume environments where IL is minimal and fee capture is strong.
For users who've deposited BTC as lending collateral, Boost offers a way to make that collateral productive while it sits in the protocol.
How to start earning
Visit the Boost interface at lp.chainflip.io/boost, connect your wallet, and select your fee tier based on your risk/reward preference. Lower tiers fill more frequently but earn less per swap. Higher tiers earn more but may sit idle during low-volume periods.
Once deposited, your BTC earns fees automatically. You can withdraw at any time without lockups.
Resources
Swap Now - Start swapping native assets
Lend BTC - Borrow against native Bitcoin
Blog - Product updates and announcements
Chainflip Scan - Track swaps and network activity
Website - Explore Chainflip
Other Chainflip Products:
Boost - Earn fees by providing single-sided liquidity with no IL risk
Stablecoin Strategies - Deposit stablecoins and earn optimized yields
Provide Liquidity - Supply assets to Chainflip's liquidity pools
Stake FLIP - Delegate FLIP and earn staking rewards
Find us:
What is impermanent loss and why doesn't Boost have it?
Impermanent loss occurs when you provide liquidity to a two-asset AMM pool and the price ratio between assets changes, causing the pool to rebalance and leave you with less of the appreciating asset. Boost pools only accept single-asset deposits (like BTC), so there's no second asset to create a price ratio. Without a ratio to rebalance, IL is structurally impossible.
How much can I earn from Boost?
Returns depend on swap volume flowing through your selected fee tier and total deposits competing for that volume. In the worked examples above, we modeled scenarios showing approximately 3% monthly returns under reasonable volume assumptions. Actual yields will vary based on market conditions and protocol activity.
What's the difference between Boost and traditional AMM liquidity provision?
Traditional AMM LP requires depositing two assets (like BTC and USDC) in a fixed ratio and exposes you to impermanent loss when prices diverge. Boost accepts single-asset deposits, earns fees from accelerating swap deposits, and maintains your full exposure to your deposited asset without IL risk.
Can I lose money with Boost?
Yes, but not from impermanent loss. If the price of your deposited asset (e.g., BTC) drops, your position value drops accordingly. Boost earns fees that offset some of this decline, but it doesn't protect against underlying asset price risk. You're exposed to BTC price movement just as you would be by simply holding BTC.
Are there any lockup periods for Boost deposits?
No. You can deposit and withdraw from Boost pools at any time without lockup periods or withdrawal penalties. Your BTC earns fees automatically while deposited, and you maintain full control over when to exit.
