Price Stability Model
Our price stability model ensures price stability and high exit liquidity!
Mercenaries, by definition, are not loyal to any one side. They will fight for whoever offers the highest rewards, regardless of the consequences. In the world of DeFi, Mercenary farmers are well known for wreaking havoc on protocols. They keep moving between protocols that offer the highest rewards, and often dump rewards they earned quickly in case the token value is diluted. As a result, they are capable of destabilising the ecosystem while profiting from the chaos.
In a similar fashion, large investors (or whales) often have a big influence on price. This is because they can afford to buy or sell a large amount of tokens at once. While some may be interested in supporting the project and growing the community, others may use their power to manipulate the market for their own benefit. For example, they may sell their balance when the price is high in order to shake off smaller investors and then re-enter when the price is low, effectively giving them a greater share of the market.
This unstable relationship often leads to a lose-lose situation for the protocol and its token holders. Even though token taxes may have a short-term effect on sell pressure, they do nothing to deter those willing to lose a fraction of their balance for the purpose of price manipulation or to simply dump rewards. This inevitably leads to volatility and makes it difficult for token holders to benefit from the long-term growth opportunities of a protocol.
That's why we've developed our Price Stability Model (PSM) - a state-of-the-art mechanism that has been designed to help stabilise the price of our tokens and ensure exit liquidity remains high all while protecting the continual growth of protocol-owned liquidity.
- PSM will apply to all tokens within our ecosystem. Each component of PSM has been put in place to incentivise long-term participation and discourage short-term profit-taking. By taking these measures, we can help to create a strong foundation for growth and ensure our ecosystem remains stable and resilient for all participants.
- Every time you sell YSL, xYSL, bYSL or USDy the protocol will perform a series of three separate checks based on each component of the PSM. If any of the first two checks are not satisfied (DOQ and PTR or TTR), the transaction will fail and be reverted.
- Only once the DOQ and PTR or TTR checks are both satisfied, will the protocol proceed to the final check that will be based on your SER for the token. These series of three protocol checks are illustrated in the infographic below:
- Your SER represents the maximum amount (percentage) of your YSL, xYSL, USDy, or xBUSD 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 YSL, xYSL, USDy, and xBUSD.
- Provided you do not make any outbound transaction of a token (YSL, xYSL, USDy, or xBUSD) 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).
- Your balance that will be taken into consideration will vary depending on the token type. For USDy, the SER will only take into consideration your staked balance in the USDy AceVault. For YSL, xYSL and xBUSD, the SER will utilise both your wallet balance as well as your staked balance in the YSL AceVault, xYSL AceVault and xBUSD vault respectively.
- 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 YSL is currently 50%.
- Let's say that you have a balance of 1,000 YSL in the YSL AceVault.
- Let's say that you hold 10,000 YSL in your wallet.
- If you decide to sell YSL, the protocol will take into consideration the YSL that you have staked in the YSL AceVault and the YSL that you hold in your wallet.
- As you currently have 1,000 YSL in the YSL AceVault and 10,000 YSL in your wallet, this means you would be able to sell any amount of YSL up to 50% of your total balance = (0.5*11,000) = 5,500 YSL.
- Please note: the transaction will also need to satisfy the PTR for the YSL-BUSD liquidity pool and your DOQ for YSL.
- 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.
- If you decide to sell USDy, the protocol will only take into consideration the USDy that you have staked in the USDy AceVault.
- 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-BUSD liquidity pool and your DOQ for USDy.
- Every wallet will have a quota of one outbound transaction per token (YSL, xYSL, USDy and xBUSD) every 24 hours - this represents your DOQ (or "Daily Outbound Quota").
- 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 (YSL, xYSL, USDy and xBUSD) that you hold.
- The POL (or "Protective Outer-Layer") 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 BUSD held by the treasury contract. In addition, the POL has been purpose-built to only hold a maximum of 10% of the total BUSD held by the treasury. By capping the amount of BUSD that can be held in the POL, we ensure that the bulk of treasury-held BUSD is always insulated from external interaction.
- The POL will be rebalanced on a daily basis to hold 10% of the treasury-held BUSD, and the balance of BUSD held by the POL will act as a backstop for bYSL. In other words, every time a user decides to sell bYSL for BUSD, the protocol will burn the bYSL and draw upon the balance of the POL to provide BUSD 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 bYSL. 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 BUSD 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) and the Treasury Transmittance Rate (TTR). These measures ensure that even if a bad actor were to acquire a large amount of ill-gotten bYSL, they would not be able to extract more than the maximum allowed amount of BUSD from the treasury, as determined by the TTR. This further enhances the security of the bYSL protocol and the assets held within it.
- The POL (Protective Outer-Layer) is designed to only hold a maximum of 10% of the total BUSD held in the treasury. This is done to ensure the majority of the treasury-held BUSD 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 PTR, or Pool Transmittance Rate, is an established limit for the amount of tokens that can be sold for YSL, xYSL, bYSL, and USDy within their respective liquidity pools. It functions as a restriction, by setting the maximum sell size of each token as a percentage of the pool's total liquidity.
- The PTR (Pool Transmittance Rate) works by limiting the amount of a token that can be sold within a single transaction. The PTR is designed to minimize market manipulation by controlling the amount of tokens that can be sold within a specific pool based on the total liquidity within that pool. This approach helps prevent large sell-offs and maintains deep liquidity, allowing for a more stable trading environment.
- The Treasury Transmittance Rate (TTR) is a security feature that aims to prevent market manipulation by limiting the amount of bYSL that can be sold per transaction in relation to the total balance of BUSD held by the Treasury. This safeguard ensures that the treasury is protected from being drained in a single attack, and that there is always enough BUSD available to meet demand. The TTR is applied to every transaction when bYSL is exchanged for BUSD through the protocol, providing added security for the bYSL token.
- The TTR is set at 1%, meaning that for every transaction where bYSL is sold for BUSD via the protocol, no more than 1% of the total Treasury-held BUSD balance can be transacted. This helps to prevent a single attack from draining the entire Treasury, and ensures that there is sufficient BUSD available to meet demand. By capping the amount of BUSD that can be transacted in a single transaction, the TTR provides an additional layer of security to the bYSL token.
- When attempting to sell bYSL in exchange for BUSD via the protocol, if the transaction exceeds the Treasury Transmittance Rate (TTR), the transaction will be reverted. This is a security measure implemented in the protocol to prevent a single large transaction from draining the entire Treasury balance of BUSD and ensure that there is always sufficient BUSD available to meet demand.