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Clone Protocol: A How-to Guide - Airdrops, Strategies, and More

March 21, 2024

In conclusion

Barely months apart from the first time we mentioned “Clone protocol” to you, things have been absolutely formula-one-like and sporadic! It’ll be some sort of cognitive dissonance to act like we are not aware that some of you have made a killing on meme coins on Solana. The degeneracy that’s been unleashed in the past few weeks has been nothing short of exhilarating to witness!

Albeit, for the rest of you degenerates like myself who are yet to hit that pot of luck that has us dreaming of early retirement, come closer, take a second look at the header, and lock in — I come bearing good news!

But before we delve into the meal of the day, it’ll not harm if we embark on a wee bit of circling back for those who have little to no idea what Clone protocol is about, shall we?

About Clone: Primer

The Clone protocol facilitates the establishment of a liquid market (decentralized exchange: DEX) for non-native assets on the Solana blockchain. Essentially, Clone enhances liquidity for assets that are not native to Solana, thereby facilitating the influx of these assets and their holders. This (Clone protocol) eliminates concerns about the illiquidity of bridged assets by introducing a novel primitive known as cloned assets or clAssets.

There are two core concepts behind Clone:

  • The Comet liquidity system (CLS), which is a Uniswap v3-inspired system that allows liquidity providers to create “comets” by first depositing collateral and then borrowing an amount of collateral and clAsset to proceed with providing liquidity. The collateral is provided in USDC
  • The introduction of a distinctive type of Automated Market Maker (AMM) called a cAMM, which aggregates resources from the comets made by the LPs to provide liquidity to non-native assets, harnessing liquidity before trade execution.

In sum, Clone protocol is a Solana DEX optimized for non-native token trading using cloned assets and a unique comet liquidity system to solve the problem of low liquidity for bridged assets. Currently, some cloned non-native assets are clARB, clOP, clSUI, and clDOGE — all of which are popular and high-volume tokens non-native to the Solana blockchain.

There are many more moving parts to the Clone protocol. As such, we recommend reading our previous article to get acquainted with all other mechanics, including how liquidation, peg maintenance, and clAsset deprecation work.

With that being done, the next step is to understand how to use the Clone protocol, and like always, we’re here to help you navigate through, with some of the most interesting bits saved for the latter part of this protocol tour guide.

How to use Clone protocol

When you navigate to the project’s website, you will discover two ways to interact with the Clone protocol:

  • As a trader swapping USDC for clAssets
  • As a liquidity provider, creating comets that facilitate the exchange of non-native assets.

The Trader

To start trading on Clone protocol, simply click on “Trade,” after which you’ll be directed to the trading terminal or cAMM, as seen below.

Proceed to select the clAsset for which you intend to swap your USDC (clARB, clOP, clSUI, clDOGE).

Insert the amount to be swapped and proceed to click on “Swap”

Select confirm on your wallet, and the swap will be executed.

You will also notice a change in the balance of the clAsset.

To keep track of the clAssets you own, simply click on Portfolio.

Providing liquidity (LPs)/ Creating Comets

In order to provide liquidity or create a comet on Clone protocol, click “LP,” and you will be redirected to the comet liquidity system interface.

Connect your wallet.

The first step right after is to pay a 0.07 SOL one-time fee to register your account. It is important to note that this fee doesn’t go to Clone protocol. Rather, they’re (fees) mandatory for account registration on the Solana network and are paid directly to the network.

Once paid, proceed to select the asset for which you wish to provide liquidity (clARB, clOP, clSUI).

Click on the choice asset and proceed to click on “Deposit collateral to get started,” as seen below.

Proceed to click on “add new liquidity position,” as seen below.

Next step: Click on USDC, as seen below, to make a deposit.

Specify the amount you wish to deposit and proceed accordingly by clicking on “deposit collateral”

Your collateral deposit will be displayed below the Position section of the dashboard alongside your health score.

Wrapper

This section of the Clone protocol provides for the minting of clAssets in exchange for bridged assets, thereby promoting arbitrage on Clone.

Arbitrage opportunities on Clone are important in peg maintenance between the assets and their cloned counterparts.

To indulge in arbitrage on the Clone protocol, click on “Wrapper”, and proceed to use deBridge to bridge over the asset.

Then, proceed to convert the deAsset to clAsset by swapping one for the other.

Clone protocol points program

Points are undoubtedly the holy grail of this cycle, and the Clone protocol has also kickstarted their points program — rewarding interaction with points that could become something later for those who play!

There are three types of points:

  • The liquidity points earned from creating a comet or liquidity position
  • The trade points earned from swapping USDC for clAssets
  • Social points earned through participation in the Clone protocol zealy campaign.

If you’re looking to rack up points, then you can start interacting from this moment. The first season of the points program is live. In addition, Clone is running a trading points promotion, offering a points boost (1.5x multiplier) for a three-week period. The team has also announced the Cloner classic giveaway, where every dollar traded earns you a ticket into a random draw. At the end of the three-week trading program, the top three winners from the draw will earn 100k, 25k, and 10k points respectively.  

You can also view your points below in accordance with your global rank.

However, if you want to quickly climb the leaderboard, earn more points, and position yourself for juicy rewards on more than one protocol, then don’t skip the next few paragraphs and pay close attention.

Trading strategies to farm Clone and other protocols at a go

Clone protocols have created different synergy points between the protocol and other dApps or projects, allowing users to earn points through different methods and trading strategies.

For example Pyth Stakers will be able to earn points on Clone and can unlock a multiplier between 1.2x to 1.6x depending on the amount staked. The relationship between Pyth and Clone is that of an oracle provider and user, respectively. Pyth oracle provides reliable pricing updates for the clone protocol, enabling deposited assets to remain consistent with their market price.

Another waypoint explorers (not farmers 😉) can play the point game smarter is through the process of funding rate farming. This process or concept underscores taking advantage of funding rate fees of perp protocols where cloned assets can be traded, such as Drift and Zeta, to earn both funding rate fees and clone points.

How does it work?

Point explorers searching for more points can choose a Perp decentralized exchange where the funding rate is higher and establish a position dependent on the direction of funding rate payments (long or short) while opening an opposite position on Clone. Doing this will put the user in a delta-neutral position, earning both Clone points and the funding rate simultaneously. In addition, the user will be eligible for rewards on the Perp protocol (if they’re tokenless) and Clone.

The Solend approach

To make things more interesting, Clone protocol has launched a pool on Solend for clAssets. This means that users or point explorers can exchange USDC on Clone for a specific clAsset, for example, clARB, and proceed to borrow USDC or SOL on Solend via the Clone pool. That’s not all! The user or point explorer can proceed to use the USDC or SOL to open a position on Drift or Zeta, playing out the strategy mentioned above to earn the following:

  • Funding rates on the choice Perp protocol
  • Clone points
  • Eligibility for rewards on the choice Perp protocol (if they are tokenless)

We call this capital efficiency at its finest!

Concluding thoughts

We definitely think of ourselves as Clone protocol’s loudest cheerleaders, as we do believe that they’ve got what it takes to change the status quo for Solana in this cycle with regard to trading non-native assets on the Solana network.

However, what truly stands out is the intuitive integration with deBridge, making it a breeze for users to bridge non-native assets to Solana. This allows them to access a liquid market quickly by seamlessly swapping bridged assets for clAssets. Plus, the user interface is incredibly straightforward and easy to use.

Although the boosted points may not stick around forever, the buzz surrounding the Clone protocol isn't as overwhelming as with other protocols, presenting an excellent opportunity to capitalize on it for future rewards.

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