XY Finance

Liquidity Mining

Lend your cryptos and earn your rewards.

Liquidity Provision

Liquidity mining is one such smart approach to help investors make passive income, taking full advantage of the massive buzz around DeFi while allowing users to profit from their own holdings. The notion of liquidity mining is that it enables users to invest/lend some of their funds in the liquidity pools of decentralized exchanges, and through this practice, users will be able to earn trading fees and governance tokens in return as incentives. As long as you become a liquidity provider, you'll get compensated based on the overall amount of assets you contribute to the pool. The value of your stake in a liquidity pool determines your overall benefits (passive incomes). Though currently, the mechanism of the liquidity mining in Y Pools is not yet fully-fledged, we still have our edges and perks! In Y Pool, users can choose a chain that we support to provide liquidity, lending (or staking if you'd like) the two pool tokens (USDT and USDC). Note that the pool tokens on each chain are regarded as the same value. Upon providing liquidity, users will get xyUSDT/xyUSDC in exchange as their shares in Y Pool, sort of like a proof of deposit. Y pools allow USDT/USDC crypto holders to save their assets in the form of tokens, and our protocol has complete control over the assets once they are staked. Participants on the platform might exchange or utilize them for the purpose of making more profits, while the crypto holders are also entitled to collect their tokens immediately after supplying their assets to the liquidity pool.

Mining Profitability

Liquidity mining profitability consists of two forms of reward:
  • Cross-Chain Fee (Trading fee)
  • XY Token ($XY)

Cross-Chain Fee (Trading Fee)

Each swap conducted via X Swap will have its corresponding cross-chain fee depending on the amount being traded, where 80% of the fee will go to Y pools, while the rest 20% goes to DAO Treasury, which is sort of like an institution run by XY Protocol that possesses the unvested funds to ensure the normal operation of this decentralized organization.
As the pool grows in size, the underlying value of users' Proof of Deposit will increase accordingly. Later when it comes to the moment when users need to withdraw their funds from the designated pool, they will receive the assets higher in value, thereby benefiting from this spread in price.

XY Token ($XY)

Liquidity providers will receive XY Tokens as rewards primarily depending on how much of their proof of deposit (e.g. xyUSDC) is being staked. If they had locked some $XY in the vote-escrowed $XY (veXY) contract, there would be a boosted rate considered when the staking takes place.
Let's first place our focus on the term vote-escrowed token (VeTKN) and explain it verbatim. The phrase vote escrow (abbreviated as ve) is becoming widely used in the world of VeNomics. It describes a mechanism or an economic model of locking tokens away for pre-set, longer periods, helping users earn higher rewards and secure their funds and a larger share in voting the governance of the protocol (i.e. voting power). So to speak, investors' assets are placed in escrow as tokens, yet the prerequisite is that they have to lock and thus cannot sell these tokens.
Given the two formulae below, it's not hard to tell that in the contract, the rewards will be distributed not just according to the ratio of one's staked amount (veXY) over the total staked amount (total veXY), but also how much boost one could secure. We refer to this boosted staked amount boostBalance in the smart contract and it is calculated in the way as follows:
boostBalance=0.4stakedBalance + 0.6totalStakedBalanceveXYtotal veXYboostBalance = 0.4 * stakedBalance \ +\ 0.6 * totalStakedBalance *\frac{veXY}{total\ veXY}
boostBalance=min(stakedBalance, boostBalance)boostBalance = min(stakedBalance,\ boostBalance)
Suppose there are 10,000 xyUSDT (totalStakedBalance) being staked and 1% (i.e. 100 xyUSDT as stakedBalance) of it belongs to Bob.
If Bob hasn't locked any $XY, then he will not have any veXY, making the item after the plus mark (+) in the first formula above nil, so the boostBalance for Bob, in the end, would only be 40.
However, if there are 10,000 veXY in total and 1% belongs to Bob, and he does lock up the DAO tokens, then the veXY in the formula above would be 100, which results in the boostBalance for Bob being 40 + 60 = 100. Therefore, the max boost rate would be 250%.
Last modified 10mo ago