How It Works
This explains the mechanism for liquidity rebalancing within Y Pool and how users profit from it.
Y Pool plays a large part in the ecosystem of XY Finance. With Y Pool, users can provide liquidity to the pools and earn the rewards in keeping with the degree to which they fund the pools. Technically, there could be up to three types of rewards or benefits according to how the rebalancing work is being carried out.
- 1.Cross-Chain Fees 💰↔️🪙 ● Most of the cross-chain fees generated on account of cross-chain swaps will go to Y Pool, which, in return, helps provide the liquidity necessary for traders to swap more efficiently. ● While traders swap tokens via X Swap, there will be swap fees incurred by our protocol and the fees will be used to reward liquidity providers.
- 2.Liquidity Mining ⛏ ● In Y Pool, users are welcome to supply the supported tokens (USDT or USDC for now) to Y Pool so that they can obtain the proof of deposit (
xyUSDT) to certify that they've locked their tokens and made their contribution. ● If the users stake their proof of deposit (
xyUSDT) in Y Pool, they can thus earn XY Tokens. The amount of
$XYas a reward will vary depending on the amount being staked and the period of time the assets are staked. The more time and amount, the more rewards. ● The function "Stake" is nearing completion, and as of then trading with XY will help you earn more income.
- 3.Rebalance Rewards 🧧 ● We support USDT/USDC (again, for now) on different chains, and as the source-chain tokens on one chain are being swapped to another, the swap fees charged will go directly into the Y Pool, hence increase in liquidity. The Y Pool value in total will grow because of the cross-chain fees and the unbalanced pool is then rebalanced. ● Since we have deployed Y Pool on each chain we support, users can decide whether they'd love to deposit their funds to boost liquidity and wherein the whole process is highly decentralized. The liquidity providers will get rewarded with incentives (liquidity tokens as the swap fees) in return as they make swaps via X Swap.
The above-mentioned mechanism is specifically devised to reward those who help rebalance the tokens on each chain. For instance, suppose we have the following in Y Pools:
- 500,000 USDT on Ethereum
- 1,000,000 USDT on BSC
- 2,000,000 USDT on Polygon
And if someone intends to trigger the
rebalancefunction and swap their own 1,000,000 USDT
from Ethereum to Polygon, then an equivalent amount of 1,000,000 USDT will be placed in the pool on the Ethereum chain. Meanwhile, 1,000,000 USDT will be taken out from the pool on the Polygon chain.
Therefore, the upshot will be that the trader in question will receive $XY as a reward and the final pool balance will be as follows:
- 1,500,000 USDT on Ethereum
- 1,000,000 USDT on BSC
- 1,000,000 USDT on Polygon