Staking and Stability Mechanism
#Governance Token Staking
Holders of governance tokens can choose to stake their governance tokens in the staking pool to support the stability mechanism. As a result, these governance token holders may claim a share of the platform staking rewards in proportion to their share of the staking pool. Each second the platform staking rewards are allocated to the holders of staked governance tokens.
In order to avoid the creation of more and more staking pools for each new tracker token, a unified YOU staking pool for all tracker tokens is created. The new YOU staking pool will pay rewards in YOU that it purchases on the markets by swapping revenues from individual tracker tokens, as long as the market impact of trading is not too big and the pegs of the tracker tokens hold.
- There will be a single YOU token staking pool on youves that pays rewards in YOU. Any unswapped rewards in other tokens will not be paid out and are redistributed to the remaining users in the staking pool.
- The tracker tokens will have their staking reward share retained in the unified staking pool. The staking reward remains there until they are traded for YOU tokens.
- Four times a day, at 05:00, 11:00, 17:00 and 23:00 UTC a new five minute trading window will start.
- During 12 hours before the beginning of each trading window, the following aggregate values are observed:
- The median of hourly values of the YOU vs. the tracker tokens.
- Based on the information, the platform aims to swap the accumulated staking reward share amounts on each tracker token address against YOU tokens on an exchange. This includes uUSD, uDEFI, uBTC and any potential other tracker tokens and also the fee earnings for the flat-curve DEX. For each token this trading will be done as long as the both of the following conditions are fulfilled:
- The specific tracker token is no more than 2% off its soft peg.
- The YOU price does not move by more than 5% vs. the observed median.
- If the full amount on an address of a specific tracker token cannot be swapped without violating the above condition, then only a fraction of the specific tracker token will be swapped up until the point where the condition starts to be breached.
- Any remaining tracker tokens that cannot be swapped will be retained on the address until the next trading window.
- YOU tokens acquired by the contract are allocated to the staked YOU tokens.
- YOU token holders that decide to unstake their YOU holdings at any point in time will receive the swapped YOU tokens which were allocated to their YOU holdings, subject to the conditions of the long-term staking.
- The remaining tracker tokens that so far could not be swapped are given up and redistributed to the remaining users in the staking pool.
The above described YOU token rewards are incorporated in a long-term incentives program, similar to the long-term farms.
The purpose of the long-term staking is to reward longer-term staking. It works similar to a normal staking pool, but the individual stakes are time-stamped. When claiming a wheighting factor is applied that grows linearly from 0% to 100% over the course of a time period, the
full_weight_period_in_days is currently set to 180 days.
In order to be able to flexibly manage one's YOU stake, the unified staking pool allows to create different stakes, which can be claimed independently. The flexibility offered is similar to interacting with the unified staking pool with different wallets. Please note that ever more stakes may also incurr higher gas fees.
- On deposit, the stake is time-stamped and the user becomes eligible for ongoing rewards added to the staking pool balance; past rewards are not considered. This is the same methodology as in any normal staking pool.
- Every participant in the staking pool receives their unweighted YOU token allocation on an ongoing basis, based on the swapping activities of the unified staking pool.
- If another deposit is made by a user to an existing stake, then the weighted average is calculated as follows:And the timestamp is updated to match the calculated average age.
average_age = (new_deposit * 0 + previous_deposit * Min(100%, age_in_days / full_weight_period_in_days)) / (previous_deposit + new_deposit)
- Please note that the
previous_depositdoes not include any rewards.
- As both the deposit and the rewards are in YOU tokens and the rewards have a compounding nature, there is no “claim” of rewards, only withdrawal of deposit and reward.
- On withdrawal, the age is calculated based on the deposit time-stamp. Then this formula is applied:
weighted_reward = unweighted_reward * MIN(100%, age_in_days / full_weight_period_in_days)
- There is a residual payout
residual_reward = unweighted_reward - weighted_reward
residual_rewardis redistributed to the entire farm pool of the same pair and
unweighted_rewardis set to 0.
In the case that one or several vaults become under funded, such that a step in is no longer profitable, the stability mechanism will be activated. As a consequence, the governance tokens in the staking pool will be locked. Th necessary amount of YOU tokens will be used to collateralise these vaults. This is done either by selling them in the market any buying or minting tracker tokens to perform step-ins. This will be done until all the vaults in question have adequate collateral or until the stability mechanism runs out of governance tokens.