YOP Lock Box Staking — APYs and how they are calculated
In this post, we will walk through the details of the YOP Lock Box and how APYs are calculated.
What is the YOP Lock Box?
The YOP Lock Box is a feature of the YOP Platform which allows YOP Token holders to Lock Up (or Stake) their YOP Tokens in return for a share of Community Emissions and Fees generated by the platform.
YOP Tokens can be staked for a period of 1 month to 60 months. The longer tokens are staked for the higher the APY offered. This is done to incentivise people to lock up their tokens for longer periods, thereby removing them from circulating supply. This helps to create scarcity in token supply, thereby protecting the token price.
What APYs are being offered?
The APYs on staking are variable and are affected by several factors:
- Total YOP Staked: The number of YOP Tokens which have been staked by the community
- Stake Duration: How long these YOP tokens have been staked for
- Total Pool Size: The number of YOP Tokens staked multiplied by their stake duration
- Total YOP Rewards to staking: The total number of YOP tokens which are allocated to the Staking pool. This is a combination of community emissions and YOP tokens purchased with fees generated from the platform
Where can I see my APYs?
We are currently working on enhancements to the My YOP section of the app to provide details of all stakes a user has and the performance of those stakes, including current APYs.
Staking was not originally in scope for the Private Launch, but based on community feedback, we accelerated development to get the core functionality included in the Private Launch. Unfortunately, this means that not all staking related features in the app are complete. One of these is the ability to view details of stake positions and APYs. This functionality is already in development and will be delivered as soon as possible.
How do I calculate my APY?
As mentioned above, we will be adding functionality to the My YOP section of the app soon, which will display the current APY for each of your Lock Box Stake positions. In the meantime, if you want to calculate the APY yourself, here are the steps:
- Get the current overall size of the staking pool
- Calculate your stake size
- Calculate your share of the pool
- Calculate community emissions allocated to staking
- Calculate your share of the community emissions
- Calculate APY
This is a somewhat complex process, which is why we are working hard to provide this information in the My YOP section of the App — so you don’t have to do these calculations yourself. However, in the interests of full transparency, we will walk through these calculations below and show how the APY can be affected by the different input parameters.
1. Get the current overall size of the staking pool
- This requires using Etherscan to look at data within the staking smart contract. Navigate to this URL: https://etherscan.io/address/0x5b705d7c6362a73fd56d5bcedf09f4e40c2d3670#readProxyContract
- Scroll down to #22 — totalWorkingSupply and click on it to show the value.
- As of the writing of this post, the current value is 3,756,512,538,679,920.
2. Calculate your stake size
- Your stake size is number of YOP Tokens staked multiplied by the staking duration in months.
- The YOP Token is an 8 decimal token, so to calculate your stake size, you first need to add eight zeros to the number of YOP tokens staked.
- For Example, If you staked 10,000 YOP Tokens, then the value you need for this calculation is 1,000,000,000,000 — i.e. 10,000 with eight additional zeros added to it.
- For the purposes of this example, we will assume a stake duration of 12 months, which gives a stake size of 12,000,000,000,000
3. Calculate your share of the pool
- Your share of the pool is equal to your stake size divided by the overall pool size:
- 12,000,000,000,000 / 3,756,512,538,679,920 = 0.003194452268
4. Calculate community emissions allocated to staking
- The amount of community allocations allocated to staking is variable and will be tuned over time to ensure a consistent, sustainable and relatively stable APY rate over time lifetime of the staking pool.
- During the early stages of the Private Launch, 15% of emissions are being allocated to Staking, 15% to Vaults, with 70% being held in reserve for future allocation to the community.
- There are several reasons for this — we want to ensure the protocol is functioning as expected, so out of an abundance of caution, we are initially being careful with emissions until the protocol is bedded in. We are also making every effort to not adversely affect the YOP Token price by releasing too many tokens too quickly. Additionally, if we allocate a higher initial percentage of emissions, the estimated APYs that people see when staking would have been unsustainably high — in the tens of thousands of percent. As the initial inflow of tokens into the staking pool stabilises and once there is a cap in place, we will carefully tune the emissions upwards to ensure we can provide the kinds of APYs that the community desires, but in a sustainable way.
- As per our Tokenomics emissions schedule, there will be 3,891,931 total Community Emissions in 2022.
- Based on the current allocation to staking of 15% (which, as mentioned will be adjusted over time to maintain favourable APYs), this results in a total of 583,789.65 tokens allocated to Staking in Year 1.
5. Calculate your share of the community emissions
- Your share of community emissions is equal to your share of the pool multiplied by the emissions allocated to the pool. Using our example of 10,000 tokens staked for 1 year, the calculation would be : 0.00318 * 583,789.65 = 1,856 YOP Tokens in Year 1.
6. Calculate APY
- 10,000 Tokens Staked for 1 year will yield 1,856 tokens in return = 18.56% APY.
- The same number of tokens staked for 2 years would yield an APY of 33.97%.
- If the same 10,000 tokens were staked for the full 5 years, the APY would be 71.12%, based on the current pool size and token emissions over the 5 year period.
As mentioned above, the APYs are variable and are affected by several factors including pool size, size and duration of stake, community emissions to the staking pool and total YOP purchased with fees. As the YOP platform evolves, we will be adding charts and data to show historical APYs, so you will have full transparency as to how your APYs have changed over time.