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Price Stability Model
Our price stability model ensures price stability and high exit liquidity!
Are you a fan of Star Wars? Then you're probably familiar with the likes of Boba Fett and his fellow mercenaries. Mercenaries, by definition, are not loyal to any one side. They will fight for whoever offers the highest bounty, regardless of the consequences.
Unfortunately, the DeFi world has its own version of these guns for hire: mercenary farmers. They're notorious for causing chaos in protocols - jumping from one to another in search of the juiciest returns and then quickly dumping their earnings when the token value is diluted. They're like the wild cards of the ecosystem, capable of causing serious instability while reaping the rewards from the chaos.
But that's not all - protocols also have whales to contend with. These deep-pocketed investors hold significant power due to their ability to buy or sell large amounts of tokens at once. While some use their power for good, others manipulate the market for their own personal gain. It's not uncommon for them to sell when the price is high, causing panic and shaking off smaller investors, only to swoop back in and buy up more when the price drops, effectively securing a greater share of the market. It's like a game of cat and mouse, with the whales holding all the cards.
This volatile dynamic between mercenaries, whales, and token holders often results in a lose-lose situation for the protocol and everyone involved. Although token taxes may have a short-term effect on sell pressure, they do nothing to deter those who are willing to lose a fraction of their balance for the purpose of price manipulation or to simply dump rewards. This not only leads to an unstable market but also makes it impossible for token holders to benefit from the long-term growth opportunities of a protocol.
That's exactly why we've developed our Price Stability Model (PSM) - a state-of-the-art mechanism that will not only stabilise the price of our tokens, but will also keep exit liquidity high while safeguarding the long-term growth of treasury-owned liquidity. It's the perfect antidote to the chaos caused by mercenaries and whales alike and will ensure our ecosystem remains stable and resilient for all participants.
PSM also doubles a security measure, by effectively eliminating the likelihood of a catastrophic sell-off of ill-gotten tokens in the event of an exploit.
Our ecosystem is designed to promote long-term participation and discourage short-term profit-taking. To achieve this, we have implemented the PSM, a comprehensive system that encompasses every token in our ecosystem. Each component of the PSM has been carefully crafted to create a strong foundation for growth, ensuring stability and resilience for all participants.
- When selling xYSL, bYSL, or USDy, the protocol will perform a series of four separate checks. The first three checks include DOQ, PTR, and STR. If any of these checks are not satisfied, the transaction will fail and be reverted. The protocol will only proceed to the final check, which will be based on your SER for the token, once the DOQ, PTR, and STR checks are satisfied. For a visual representation of these three protocol checks, please refer to the infographic below.
- Your SER represents the maximum amount (percentage) of your bYSL, xYSL or USDy balance that can be sold at any given time.
- Your SER will be token-specific, which means you can have a different SER for your balance of bYSL, xYSL and USDy.
- Provided you do not make any outbound transaction of a token (bYSL, xYSL or USDy) from your wallet, your SER for that token will continue to increase every 24 hours until it reaches its maximum of 100% - which means you'd be able to sell 100% of your balance (provided the DOQ and PTR checks are satisfied).
- Holders of a Phoenix Ape NFT are able to sell up to 100% of their bYSL, xYSL, or USDy balance without being subject to the limitation imposed by the Sigma Exit Rate. However, keep in mind that there are only 500 Phoenix Ape NFTs available for purchase, making them highly sought-after .
- SER works by limiting the sale of tokens from a wallet, by taking into account when the holder first acquired the token or last sold the token.
- SER is variable and will start at 0.1%. It will remain at 0.1% for 2 days. On day 3 it will increase to 1%, and every 24 hours thereafter it will increase by 1% - reaching a maximum of 100% on day 103. However, it will reset back down to 0.1% every time you make an outward transaction of the token from your wallet (except for vault deposits).
- Your SER for a token will initiate when your wallet balance for the token increases above 0. In other words, your SER for a token will commence the moment you receive the token in your wallet.
- This means, once your balance for a token increases above 0, your SER will be initiated - whereby it will remain at 0.1% for 2 days. On day 3 it will increase to 1%, and every 24 hours thereafter it will increase by 1% - reaching a maximum of 100% on day 103.
- Your SER for a token will reset back down to 0.1% every time you sell the token.
- Your SER for a token will reset back down to 0.1% every time you transfer the token to another wallet.
- Your SER for a token will reset back down to 0.1% when you use the Transfer All function to transfer your entire token balance to another wallet (note that your SER for a token will not re-initiate until your wallet balance for the token increases above 0).
- Let's say that your SER for bYSL is currently 50%.
- Let's say that you hold 11,000 bYSL in your wallet.
- If you decide to sell bYSL, the protocol will take into consideration the bYSL that you hold in your wallet.
- As you currently have 11,000 bYSL in your wallet, this means you would be able to sell any amount of bYSL up to 50% of your total balance = (0.5*11,000) = 5,500 bYSL.
- Please note: the transaction will also need to satisfy the PTR for the bYSL-USDC liquidity pool and your DOQ for bYSL.
- Let's say that your SER for USDy is currently 50%.
- Let's say that you have a balance of 1,000 USDy in the USDy AceVault.
- Let's say that you hold 10,000 USDy in your wallet.
- As you currently have 1,000 USDy in the USDy AceVault, this means you would be able to sell any amount of USDy up to 50% of your USDy AceVault balance = (0.5*1,000) = 500 USDy.
- Please note: the transaction will also need to satisfy the PTR for the USDy-USDC liquidity pool and your DOQ for USDy.
- Every wallet will have a quota of one outbound transaction per token (bYSL, xYSL and USDy) every 24 hours - this represents your DOQ (or "Daily Outbound Quota").
- An outbound transaction will include: the transfer of tokens to another wallet, when tokens are sold, and when the Transfer All function is used.
- The DOQ works by limiting the outbound transactions a token holder can perform from a wallet on a daily basis, by taking into account when the holder first acquired the token or last sold/transferred the token.
- Your DOQ is token-specific - therefore you will have a DOQ for each token type (bYSL, xYSL and USDy) that you hold.
- The Protective Outer-Layer (POL) is a security sublayer for the treasury contract. This is because no other contract apart from the POL will be able to interact with the USDC held by the treasury contract. In addition, the POL has been purpose-built to only hold a maximum of 10% of the total USDC held by the treasury. By capping the amount of USDC that can be held in the POL, we ensure that the bulk of treasury-held USDC is always insulated from external interaction.
- The POL will be rebalanced on a daily basis to hold 10% of the treasury-held USDC, and the balance of USDC held by the POL will act as a backstop for YSL. In other words, every time a user decides to sell YSL for USDC, the protocol will burn the YSL and draw upon the balance of the POL to provide USDC for the exchange.
- To ensure optimal security our protocol will implement a reset of the rebalance time each time the POL balance drops by 10%. As a result, the rebalance time can be reset up to 9 times (i.e. when the POL balance falls below 90%, 80%, 70%, 60%, 50%, 40%, 30%, 20% and 10%).
- This 24-hour delay will serve as an additional layer of security. To put its benefit into context, we'll look at a quick example. Let's say a bad actor were to somehow acquire a large amount of ill-gotten YSL. In theory, if the rebalance time were to occur daily at a set time, the bad actor could drain the POL moments before the rebalance time, and moments later once the POL is rebalanced. But, implementing a 24-hour delay before the next rebalance occurs would limit the exposure to the USDC held by the POL prior to the rebalance.
- Please note: that this scenario is highly unlikely in reality due to the other security measures implemented in the protocol, such as the Daily Outbound Quota (DOQ).
- The POL (Protective Outer-Layer) is designed to only hold a maximum of 10% of the total USDC held in the treasury. This is done to ensure the majority of the treasury-held USDC is always protected from external interaction. The protocol includes a rebalance mechanism that is triggered by OpenZeppelin Defender, which performs the rebalance automatically every 24 hours or at the last rebalance time.
- The Pool Transmittance Rate (PTR) is a price stability feature that ensures the stability of the bYSL, xYSL, and USDy tokens in their respective liquidity pools. This feature restricts the amount of tokens that can be sold in a single transaction by setting a maximum size for each outbound transaction as a percentage of the total liquidity in the pool. By limiting the size of sell orders, the PTR helps prevent large transactions from having a significant impact on the market, thereby maintaining the stability of the liquidity pools and preserving the value of the tokens.
- The PTR operates by putting a cap on the amount of a token that can be sold within a single transaction. Its mission? To minimise market manipulation by controlling the number of tokens that can be sold within a specific pool, based on the total liquidity in that pool. This approach helps prevent colossal sell-offs and maintains deep liquidity, paving the way for a more stable trading environment.
- The USDy PTR is a dynamic, determined by the protocol's current reward rate. When the protocol's reward rate decreases, so does the PTR for USDy, dropping to its minimum of 0.06%. But fear not! When the reward rate bounces back, the PTR for USDy will rise once more, reaching its maximum of 0.1%.
Token | Liquidity Pool | PTR |
|---|---|---|
bYSL | bYSL-USDC | 1% |
xYSL | xYSL-USDC | 1% |
USDy | USDy-USDC | 0.1% |
- The Stake Transmittance Rate (STR) mechanism is specifically designed for the USDy token. It limits the selling of USDy tokens by requiring holders to maintain an equal amount of USDy in the USDy vault to execute a sell order. This requirement aids in preserving the value of the USDy token and enables it to serve as a valuable asset for holders to generate returns.
- The exact amount needed to initiate a sell order may vary, but it is directly linked to the amount of USDy stored in the vault. This ensures that the selling of USDy tokens aligns with the overall health and stability of the token. It is important to note that this mechanism applies exclusively to USDy and not to other tokens, such as YSL, xYSL, or bYSL.
- The Stake Transmittance Rate (STR) mechanism functions by mandating that holders maintain an equal amount of USDy in the USDy vault to execute a sell order. This requirement assists in preserving the value of the USDy token and ensures that the transfer of tokens aligns with the token's overall health and stability. The precise amount required for a transfer may vary, but it is directly linked to the amount of USDy held by the user in the vault.
- The WOQ works by limiting the outbound transactions a Phoenix Ape NFT holder can perform from a wallet on a weekly basis, by taking into account when the holder first acquired the NFT or last sold/transferred the NFT.
- The WOQ is wallet-specific, meaning it's not specific to each Phoenix Ape NFT you hold. Instead, it applies to your entire wallet. So, if you transfer or sell one of your Phoenix Ape NFTs, you'll need to wait 7 days before making another transfer or sale from your wallet.
Last modified 1d ago