The backbone of our ecosystem that provides stability and sustainability!
We've all witnessed it - a project launches with much fanfare, only to fizzle out and slowly fade into oblivion due to a lack of liquidity. It’s a problem that haunts many DeFi projects, but it’s one that can be avoided with treasury-owned liquidity.
The issue with traditional projects is that they rely on liquidity providers to get the ball rolling. They offer incentives and tokens to entice people to jump on board, effectively renting liquidity from them. But here's the catch: if these incentives don't continue to excite liquidity providers, they'll bail and take their liquidity along with them, leaving the project high and dry.
That's where our robust incentive model comes into play. We've purpose-built our protocol to generate treasury-owned liquidity autonomously, meaning it can never be withdrawn on a whim. Our AlphaVaults and HydraVaults all work in tandem with our unique asset utilization algorithm to create liquidity that's always there when you need it.
We're not just incentivizing short-term gains; we're building a sustainable model that rewards long-term participation and ensures the ecosystem has the deep liquidity it needs to thrive.
And the best part? Our approach creates a self-perpetuating feedback loop that boosts confidence in the sustainability of the protocol. As more users participate, more treasury-owned liquidity is generated, leading to an ever-growing level of exit liquidity, which in turn increases confidence for even more people to jump on board. It's like a snowball effect, creating a virtuous cycle that we strongly believe will have a lasting impact on the health and growth of our ecosystem.
In short, treasury-owned liquidity is the backbone of our ecosystem. It not only ensures deep exit liquidity is always available and avoids the negative side-effects of traditional liquidity mining programs, but it also creates a self-perpetuating feedback loop that enhances the sustainability of our protocol.
👉 Learn about how our Price Stability Model (PSM) provides stability and ensures exit liquidity remains high.
The protocol generates liquidity with every deposit made into the AlphaVaults and HydraVaults as well as through the tax collected from the royalty and rental income of the Phoenix Ape NFT:
- 1.AlphaVaults -> When the USDy Buyback and Burn (UBB) is activated, the protocol will purchase YSL via the protocol on every deposit, which is subsequently sold for USDC and paired with minted USDy to create USDy-USDC protocol-owned liquidity.
- 2.Phoenix Ape NFT - a portion of the royalty and rental income will be collected as a tax. This tax will then be used to create USDy-USDC treasury-owned liquidity.
- 3.YSL HydraVault -> 37.5% of deposits are used to create an equivalent of 75% USDy-USDC treasury-owned liquidity, and 22.5% of deposits are used to create YSL-USDC treasury-owned liquidity.
- 4.bYSL HydraVault -> 37.5% of deposits are used to create an equivalent of 75% USDy-USDC treasury-owned liquidity, and 22.5% of deposits are used to create bYSL-USDC treasury-owned liquidity.
- 5.xYSL HydraVault -> 37.5% of deposits are used to create an equivalent of 75% USDy-USDC treasury-owned liquidity, and 22.5% of deposits are used to create xYSL-USDC treasury-owned liquidity.
- 6.USDy HydraVault -> 60% of USDC deposits are used to create an equivalent of 120% of USDy-USDC treasury-owned liquidity.
- 7.ChainZap Swap Fees -> 25% is combined with an equivalent value of USDy and added as liquidity to the USDy-USDC pool on ApeSwap, with the LP tokens being sent to the Treasury.
- Once the pre-minted allocation for a HydraVault has been used up, the deposit process will revert to the standard model.
- The amount of pre-minted tokens allocated to each HydraVault varies, so it's possible that one HydraVault will deplete its supply at a greater rate than another.
- The event will only run for a limited period depending on the demand and the supply of tokens.
To help boost the liquidity of our treasury-owned liquidity, we invite users to deposit USDC into our HydraVault during our Liquidity Propulsion Event. 22.5% of the USDC deposited will be used to pair with an equivalent value of pre-minted tokens, providing a significant boost to the liquidity of our protocol's representative pools. While depositing USDC during this event does not provide any direct benefits to the user, it does greatly benefit the overall health and growth of the protocol.