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Boosting Returns
Boosting is the key utility of $YOP within the ecosystem
What is Boosting?
Boosting is mechanism used to increase your returns in the Vaults and it is derived from the ratio of your Vault deposits and your staking balance in the LockBox. To achieve maximum boost, you need to maintain a balance between your share of the YOP LockBox and your share of a Vault. The closer this ratio is to 1:1, the more $YOP rewards you will receive on your Vault positions.
Before explaining the Boost, it's important to highlight that the returns for each Vault is made up of 2 key components:
- Base APY: This is the return generated from the underlying strategies in the vault and is denominated in the deposit token (e.g. USDC for USDC Genesis Vault). There is no "claim" option for these returns as they are automatically re-invested into the strategies on behalf of the depositors. When it comes to withdrawing funds, users will see an increase/decrease in their deposit tokens - depending on the Base APY generated from the strategies.
- Reward APY: This component is completely separate from the return generated from the underlying strategies, and is always denominated in $YOP. A portion of community emissions (see Emissions Schedule) is allocated to each Vault and the share of each depositor depends on the mechanism used by the YOP protocol to distribute emissions.
In the Private Launch phase of YOP, the Reward APY component of the Vault solely depended on a depositor's share of the vault. For example, if John's Vault position was 20% of all the funds in the Vault, then he would receive 20% of the emissions allocated to the Vault.
How does Boosting work?
As outlined above, the previous methodology to determine the YOP Reward allocation only considered a user's share of a particular Vault. In the new Boost methodology, both a user's share in the Vaults and share of the LockBox determines the $YOP rewards allocated to them.
The Boost is in the form of a multiplier between x1 - x10, that applies to the Reward APY. Vault depositors that do not have any $YOP Staked will receive a basic Boost (x1). Depositors that have staked, but have a lower share of the LockBox than they do of the Vault - will receive a sub-optimal Boost (x1 - x9). Users that have an equal share of the LockBox and the Vault - will receive an optimal Boost (x10). Users who have a larger share of the YOP LockBox than a Vault will max out at a 10x boost, but they will have a "boost buffer" which means that they will continue to receive a 10x boost until this buffer is eroded (by others staking in the YOP LockBox). Once this buffer has been eroded, a users boost will start to drop below 10x and they would need to stake additional $YOP in order to return to a 10x boost.
Balance between Vault deposit and LockBox stake to achieve levels of Boosts
Boost Multiplier Example:Dave has 20,000 USDC deposited into a Vault with a total of 100,000 USDC (20% share of vault).Dave wants to achieve the Optimal Boost (x10) in the Vault and has no YOP staked.In this example, there is 1m $YOP staked for an average of 12 months in the LockBox.In order to achieve the optimal boost, Dave must make sure his share of the Vault is equivalent to his share of the LockBox.Dave's share of the USDC Vault is: 20,000 / 100,000 = 20%The LockBox pool size is: 1,000,000 (YOP) * 12 (months) = 12,000,000 (YOP Months)In order to gain a 20% of the LockBox, Dave must reach 3,000,000 (YOP Months) in the LockBox. (3,000,000 / 15,000,000 = 20%)In order to reach 3,000,000 YOP Months, Dave can vary the amount of $YOP and the lock duration. Some examples of his options are shown below:
Which factors can impact my Boost?
Much like the returns quoted in the LockBox, the Boosts Multiplier cannot be guaranteed. The multiplier can go both upwards and downwards, depending on the relative growth of the Vault and LockBox. If the growth of a Vault is increasing faster than the LockBox, then the multiplier would increase. If the growth of the LockBox is increase faster than a Vault, then the multiplier would decrease.
That being said, due to the nature of the blockchain, Boost values are not constantly updating for each depositor - they are set at the time of Vault deposit or LockBox stake and only change if another action is taken by the depositor.
For example let's say Dave has a x5 Boost in the USDC Vault when he stakes his $YOP in the LockBox. If, after this, the size of the LockBox increases (due to another staker), then in theory his Boost should decrease due to a decrease in his share of LockBox and no change in share of the Vault. In practise, his Boost value recorded on-chain does not change until he performs another action - such as a stake in the LockBox, partial token withdrawal from USDC Vault or deposit in the USDC Vault.
You can use the "Get Boosted" screen to see if there is any variance between the Boost Multiplier you current have recorded on chain (called the "Current Mutiplier") and the Boost Multiplier you should have (called the "Boosted Multiplier"), based on actions other users have taken (i.e. Depositing in a Vault or staking in the lockbox).
When you first land on this screen, before entering any data, you will see your "Current Multiplier" and your "Boosted Multiplier". If these numbers are different, it means that there is a variance between the boost you are currently receiving and the boost you should be receiving.
As can be seen in the screenshot below, the "Current Multiplier" is 2.83x, while the "Boosted Multiplier" is 3.12x. This means that this user is currently receiving a Boost of 2.83x, but due to actions of other users (in this case depositing in the USDC Vault), their share of Vault has decreased, meaning that their boost multiplier should be 3.12x.
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Variance between "Current Multiplier" and "Boosted Multiplier"
In an upcoming release, we will be adding functionality to allow a user to update their on-chain Boost Multiplier directly. For now, a user needs to deposit into a vault or stake in the LockBox to have their Boost Multiplier recalculated.
Last modified 13d ago