Here’s how we manage to bring up to 65% APYs to YOP users

This post outlines how YOP will be able to offer the sky-high APY’s going into the Public Launch phase. This article contains some details about new features, so keep your eyes peeled.

Here is a Frequently Asked Question within the YOP community — How is YOP capable of giving such high APYs on my crypto?

Before getting into the APY’s and the Boosts, it is important to re-cap and highlight that the returns for each Vault are made up of 2 key components:

  • Base APY: This is the return generated from the underlying strategies in the Vault and is denominated in the deposit token (e.g USDC for USDC Genesis Vault). There is no “claim” option for these returns as they are automatically re-invested into the strategy. When it comes to withdrawal, users would see the increase in their tokens deposited.
  • Reward APY: This component of returns is separate from the return generated from the underlying strategies and is always denominated in $YOP. A portion of the community emissions is allocated to each Vault and the share of each depositor depends on a set of factors.

In the Private Launch phase of YOP, the Reward APY component of the Vault solely depended on a depositor’s share of the vault. For example, if John’s Vault position was 20% of all funds in the Vault, then he would receive 20% of the emissions allocated to the Vault. With this model, everyone receives the same Reward APY in the Vaults.

Public Launch & Reward APY’s

Moving into the Public Launch, Vault caps will be increasing significantly and there will be no gated access onto the dApp (via YOPxMEME NFTs). This would mean that the Reward APY’s in the Vaults would be diluted as new depositors arrive into the Vaults.

Based on this, the team has decided that original model of calculating Reward APY’s would not be beneficial for the protocol or the community. With the goal of keeping Reward APY’s high — especially for the dedicated YOP community who have staked in the LockBox — YOP is introducing the Boosting model for calculating the reward APY’s for Vault depositors.

Boosted Returns

In the new Boost methodology, both a user’s share in the Vaults and share of the LockBox determines the $YOP rewards allocated to them. The Boost is in the form of a multiplier x1 — x10, that applies to the Reward APY.

  • Depositors that do not have any $YOP staked will receive a “Basic Boost” (x1).
  • Depositors that have staked but have a lower share of the LockBox than the Vault, will receive a “Sub-Optimal Boost” (x1 — x9).
  • Depositors that have an equal share of the LockBox and the Vault, will receive an “Optimal Boost” (x10).
  • Depositors that have a larger share of the LockBox than the Vault will still receive a x10 boost, but they will have “Boost Buffer” — meaning they continue to receive a x10 Boost until their buffer is eroded (by other staking in the LockBox).

Example:

Let’s say Tom has a 10,000 USDC deposit in the USDC Genesis Vault (with 100k TVL) and no LockBox stake. This means that he would be at a x1 Boost within the Vault. For this example, let’s say Tom is earning 6.5% Reward APY with this x1 Boost.

If John also has 10,000 USDC (10% of TVL) deposited in the same Vault and a stake in the LockBox that gives him a 10% share of the LockBox pool — then he would be getting an x10 Boost. This would mean that he is earning a 65% Reward APY.

Summary

The Boosting mechanism has been setup to ensure that loyal community members are not diluted going into the Public Launch of YOP. It also introduces a key utility for the $YOP token within the protocol — if you want a higher APY, buy & lock-up more YOP… simple.

Over the next few days we are due to release the YOP Documentation pages which will have a more in-depth explanation of the Boost and other features included on YOP. Finally, on Launch Day you will get the opportunity to try the feature yourself and get Boosted.

Meanwhile hop onto our Telegram and Discord channels to ask questions and see how fellow community members feel about YOP. Also remember to follow us on Twitter and subscribe to our YouTube Channel to get instantly notified when we share new content.

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YOP

YOP

YOP — Yield Optimisation Protocol