yAxis & Protocol Owned Liquidity

Summary

  • yAxis proposes to allocate 250K YAXIS tokens to launch a Protocol Owned Liquidity (POL) bond program in partnership with Olympus Pro.
  • The goal is to test the Olympus Pro bond program whilst continuing to incentivise the Uniswap LP.
  • If successful, yAxis will sunset LP emissions in the future to focus on Protocol Owned Liquidity. YAxis would no longer be required to pay out 250K tokens per quarter, saving 1M YAXIS tokens over a calendar year.
  • An additional benefit of POL: yAxis would create a new revenue stream in the form of Uniswap fees.

Introduction

In 2020, an ecosystem of smart contract-powered financial products operating on blockchain networks exploded into the public consciousness.

DeFi 2.0

Although consistent definitions for DeFi 2.0 are difficult to find, most commentators list economic sustainability and protocol longevity as key components to this nascent movement.

Protocol Owned Liquidity (POL)

  • yAxis would effectively purchase liquidity, removing the need to incentivize the Uniswap YAXIS-WETH liquidity pool with YAXIS rewards. As project owned liquidity grows, the need for emissions decreases to a point where emissions may no longer be required.
  • yAxis would earn Uniswap fees through the purchased LP tokens, resulting in an additional income stream for the protocol’s treasury.
  • This would represent a saving of roughly 1M YAXIS tokens over the course of a calendar year.
  • This prevents mercenary capital from farming YAXIS, dumping YAXIS, and then leaving the project as they see fit.
  • May reduce liquidity pool depth during the transition from the current Uniswap LP Emissions to the Olympus Pro bonds program, resulting in potentially higher slippage during this period.
  • Less risk of impermanent loss and variance. With farming, users wait weeks or even months to accrue the expected APR from farmed rewards, taking a risk of impermanent loss and APR’s dropping. With bonding, users can accrue all of the expected value within a much shorter period, which helps to reduce those risks.
  • Receive YAXIS at a discount to spot market prices.
  • Opportunity to leverage capital in support of the project, with incentives aligned to ensure the project’s overall health.
  • LPs will likely realize lower yield on their capital.
  • One-time liquidity event (over the course of the vesting period) vs a continuous emissions schedule.

YIP-13: Olympus Pro POL Bond Programme

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store