Liquidity Stability Model (LSM)
Our Liquidity Stability Model ensures high exit liquidity and price stability.
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 Liquidity Stability Model (LSM) - 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.
- LSM will apply to all tokens within our ecosystem (excluding bYSL). Each component of LSM 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, USDy, xBUSD or BSHARE, the protocol will perform a series of three separate checks based on each component of the LSM. If any of the first two checks are not satisfied (DOQ or PTR), the transaction will fail and be reverted.
- Only once the DOQ and PTR 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, xBUSD or BSHARE 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, xBUSD and BSHARE.
- Provided you do not make any outbound transaction of a token (YSL, xYSL, USDy, xBUSD or BSHARE) 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 and BSHARE, the SER will only take into consideration your staked balance in the USDy AceVault and BSHARE AceVault respectively. 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).
- Every wallet will have a quota of one outbound transaction per token (YSL, xYSL, USDy, xBUSD and BSHARE) 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, xBUSD and BSHARE) that you hold.
- The 24-hour period will be determined from the time your wallet balance for the token increased above 0, OR if you already hold the token it will be determined from the time you last performed an outbound transaction.
- If you attempt to make more than one outbound transaction of a token in a 24-hour period, the transaction will fail and be reverted.
- BTR limits the size of every sell transaction for YSL, xYSL, USDy, xBUSD and BSHARE to a percentage of their respective liquidity pool.
- YSL, xYSL, USDy, xBUSD and BSHARE each have a specific PTR that applies to their respective liquidity pools;
- The PTR acts to minimise market manipulation by restricting the sale of tokens per transaction in accordance with the total liquidity held within a pool. Whilst this still allows for large sales from a single wallet per day, it prevents catastrophic sell-offs and preserves deep liquidity.
- When you attempt to sell YSL, xYSL, USDy, xBUSD or BSHARE that is greater than the PTR for the token, the transaction will fail and be reverted.