Understanding Canonical Vaults & yAxis V3 Terminology
With our v3 protocol upgrade, we fundamentally changed the way that users earn yield. A key component of this upgrade is the introduction of DAO-directed mechanisms that personalize APR and “BOOST” rewards to specific vaults.
While much of the all-new app will look and feel reassuringly familiar, we are introducing several new and potentially unfamiliar concepts to the yAxis environment.
But don’t worry, we’re here to help familiarize our users with the protocol’s key components and overall functionality, whilst also explaining protocol specific terminology.
As always, yAxis’ goal is to make DeFi easy, so let’s dive right in.
- APR: Annual Percentage Rate. APR is the annual rate charged for borrowing or earned (in the case of yAxis) through an investment and does not take into consideration compounded interest.
- Base Yield APR: The APR farmed from the vault strategy
- Boosted Rewards APR: This figure represents the minimum rewards APR, multiplied by the Personal Boost Multiplier (PBM). A 2.5x Boost of a 10% Minimum APR would give a 25% APR.
- Lock: Process of locking up YAXIS tokens for veYAXIS, giving users voting power.
- Minimum Rewards APR: Represents a vault’s lowest APR at 1x Boost Multiplier.
- Maximum Rewards APR: Represents a vault’s highest APR achievable at 2.5 Boost Multiplier.
- Performance Fees: Fees taken from a vault’s base strategy yield (Base APR) and shared among users who lock up YAXIS into veYAXIS.
- Personal Boost Multiplier (PBM): The PBM is used to boost personal vault reward APR’s and is calculated using four user specific variables. Quantity of YAXIS locked, duration/length of lock, personal TVL (total value locked) deposited into yAxis vaults, and vault voting stats (voting for more than one vault increases boosts).
- Rewards: Incentives received for interacting with the protocol.
- Strategies: Bespoke smart contracts that direct vault assets to DeFi protocols in order to generate yield.
- Vaults: Vaults are pools of funds or digital assets with an assigned strategy.
- veYAXIS: Voting Escrow YAXIS. Used to calculate personal boost multipliers, distribution of YAXIS rewards and share of platform performance fees.
- Voting Power: Voting power and veYAXIS are synonymous, with the terms being interchangeable. DAO voting currently uses the previous Quadratic voting power, and not veYAXIS.
- YAXIS: Native governance token of the yAxis protocol.
- Yield: Earnings generated and realized on an investment over a particular period of time.
NOTE: It is important to understand that YAXIS holders have TWO very different options when it comes to deploying their tokens. They can deposit their tokens into the YAXIS vault, AND/OR they can lock their tokens to increase their Personal BOOST Multiplier and to affect Rewards Distribution. Each option brings distinct utility and benefits and must be assessed critically by the individual.
When describing V3, it helps to split protocol functionality into three separate, but interconnected parts.
2: LOCK & BOOST
3: VOTE — DISTRIBUTE REWARDS
This refers to the process of depositing digital assets into yAxis’ Vaults. For example, LINK into the LINK vault, ETH into the ETH vault, and so on. Upon launch there will be 5 vaults. LINK, ETH, BTC, 3CRV, YAXIS.
- BTC, ETH LINK 3CRV vaults generate a base yield (Base APR) through their associated strategies. A 10% performance fee is taken from this yield and shared among users that LOCK their YAXIS.
- Users that deposit assets into vaults, but do not Lock up YAXIS tokens get what is referred to as “Minimum APR”. Minimum APR is defined as a combination of a vault strategy’s base yield (Base APR), plus the base YAXIS rewards (Minimum Rewards APR).
Lock & Boost
Lock & Boost is the key mechanism for increasing PERSONAL Vault APR’s. Lock refers to the process of locking up YAXIS tokens into the yAxis voting contract.
NOTE: With the Canonical vaults, APR is personalised. There is not an equal global APR for all vault users. Personal APR’s are determined by multiple factors, including how much YAXIS you LOCK up and for how long.
Locking YAXIS gives users voting power (also known as veYAXIS), to influence YAXIS reward distribution and to earn boosts (personal boost multipliers) of up to 2.5x on Minimum vault Rewards APR. Users who lock up YAXIS also receive a share of the platform revenue.
NOTE: A user MUST have YAXIS tokens in order to “Lock & Boost”. NO YAXIS, NO LOCK AND NO BOOST!
The locking of YAXIS tokens has two components.
- Users must decide how many YAXIS tokens they wish to lock.
- The user must also decide the duration for which their YAXIS tokens are locked. Tokens can be locked from 1 week to a maximum of 1 year. The relationship between voting power and voting duration is linear in nature. This means that a user locking 1 YAXIS token for a year receives 52 times the voting power of someone who locks 1 YAXIS token for a week.
Expanding on the above, locking fewer tokens for longer may result in similar voting power to that of a user who locks more tokens for shorter periods. Each user must devise their own lock strategy, one that results in the required voting power needed for a desired “Personal Boost Multiplier”. 2.5x BOOST anyone?
- The duration of Locks can be altered whenever a user wishes. After a locking period has been completed (for example after a week), users do not need to re-lock tokens. If a user locks tokens for a week, but leaves them locked for longer, the number of veYAXIS remians, but voting power diminishes over time.
Locking and boosting of YAXIS tokens does the following.
- As noted above, locking YAXIS tokens gives users voting power. By combining voting power with personal TVL of vault assets, each user is given a “Personal Boost Multiplier”. This boost multiplier increases a user’s vault APR. Simply put, the larger the multiplier, the higher a user’s APR. Remember Vault APR’s are personalised.
- The Maximum BOOST multiplier available per vault is 2.5x. Minimum Boost multiplier is considered 1x.
- It is important to understand that there is a point whereby locking additional tokens or increasing the length of the lock does not increase a user’s personal BOOST multiplier. Remember BOOSTS are capped at 2.5x and are individual to each vault.
- A user’s voting power will reduce over time, and therefore the BOOST multiplier in turn whenever updated. An initial 2.5x BOOST might for example fall to 2x. To raise the BOOST back to a MAX level, users would need to either lock up additional YAXIS tokens, or they will have to increase their current LOCK duration.
- Each vault has a Boost multiplier applied, depending on the amount of voting power relative to the TVL deposited in that vault by the user.
- By locking up YAXIS, users are also entitled to a share of the vault performance fees, which currently sits at 10%
- Locking of YAXIS also allows users to direct YAXIS rewards to vaults of choice. Additional details can be found below.
Note: An updated Boost multiplier is only applied to your APR when you either vote, claim rewards, or deposit/withdraw from the vaults. Until that ‘checkpoint’, users carry the previous Boost.
VOTE — DISTRIBUTE REWARDS
Once YAXIS tokens have been locked and personal boost multipliers have been calculated, it is time to VOTE (influence/skew) for reward distribution.
NOTE: If users do not lock YAXIS tokens they will not be able to participate in reward distribution, boost personal Rewards or earn a share of platform fees.
Voting lets users utilize their voting power (gained through locking YAXIS) to direct YAXIS rewards towards vaults of choice.
For the first week after v3 launch, each vault receives an even distribution of YAXIS rewards. At the end of the first week, reward distributions will change as user voting results are applied. At this point Reward Distribution will be entirely determined upon how users put their veYAXIS to work.
It might help to imagine the vaults as a 5-way game of tug of war. The contestants being the LINK, BTC, ETH, 3CRV and YAXIS based vaults and the prize being YAXIS rewards. Simply put, the greater the collective voting power a vault receives, the more rewards are directed to that vault.
For example, if more voting power is directed towards the LINK vault, then the LINK vault will receive more YAXIS rewards. Users are not limited to vote for just one vault. Users may wish to split their vote, for example 50–50 between LINK and BTC or ⅓ each among YAXIS, ETH, 3CRV. The user is free to distribute rewards as they see fit.
Over time, vault rewards will fluctuate from competition. This “gamification” of reward distribution will lead to ever increasing amounts of YAXIS being locked.
- NOTE: Users are only allowed to change votes once every 10 days.
- Updated reward distributions are calculated and applied once every 7 days.
We hope this has been of help, clarified terms and introduced the concepts of v3 that will become common features.
Feel free to ask questions in the Discord, where the team is on hand to answer.