The Multifaceted Utility of $YAKA: A Comprehensive Guide

TL;DR:

1. Rewards: $YAKA as the native token, used to reward liquidity providers
2. Locking: Lock $YAKA for 1 week to 2 years to obtain $veYAKA (vote-escrowed token)
3. Governance: $veYAKA holders vote on $YAKA emission allocation, token whitelisting, and IDO projects
4. Yield: $veYAKA holders earn from trading fees, bribes, weekly rebases, and IDO allocations

This article explores YAKA token’s utility within its economic model, detailing the processes of obtaining and utilizing YAKA and veYAKA, along with their governance and yield mechanisms.

Primer: ve(3,3) DEX vs Traditional DEX

Before we delve into the intricacies of Yaka Finance and the $YAKA token, it’s crucial to understand the fundamental distinction between our ve(3,3) DEX model and traditional DEXs like Uniswap.

The key difference lies in the allocation of protocol revenue, specifically the distribution of trading fees:

1. Traditional DEXs

• 100% of trading fees are allocated to liquidity providers (LPs).
• This constitutes the primary revenue stream for LPs.

2. ve(3,3) DEX Model

• Trading fees are entirely distributed to voters, not liquidity providers.
• LPs’ primary incentive comes from governance token emissions.

Key Concepts:

• Voters: Users holding veYAKA who actively participate in governance.
• Governance token emissions: The systematic distribution of YAKA tokens to liquidity pools, serving as rewards.

This structural divergence in revenue distribution and incentive mechanisms forms the cornerstone of our innovative approach to decentralized exchange dynamics.

Yaka Finance: Positioning and Functionality

Our whitepaper’s opening declaration remains unchanged: “Yaka Finance is Sei’s native liquidity engine. It is a ve(3,3)-styled DEX and launchpad.”

Yaka Finance serves two primary functions:

1. ve(3,3) DEX: Positioned to become the central DeFi liquidity hub within the Sei ecosystem.

2. Launchpad: A platform for new projects to launch and grow within the Sei network.

The $YAKA token plays a pivotal role in both components, serving as the economic bridge that fosters a robust Yaka Finance economic model.

The Multifaceted Utility of $YAKA

Defining $YAKA and $veYAKA

Before elucidating the multifaceted utility of $YAKA, we need to clearly define $YAKA and $veYAKA:

• $YAKA: The native token used for rewarding liquidity providers through emissions.
• $veYAKA: The governance token that captures value within the Yaka Finance economic system.

$veYAKA is the vote-escrowed form of $YAKA. Any $YAKA holder can lock their tokens for up to 2 years and receive a $veYAKA NFT in exchange.

$YAKA’s Obtaining and Utility

Obtaining:

• Limited initial distribution methods: community airdrops, Voyager NFT airdrops, etc.
• Primary acquisition method: providing liquidity on Yaka Finance.

Utility:

• Serves as a reward token for liquidity providers.
• Can be locked to become $veYAKA, capturing long-term value in the Yaka Finance ecosystem.

$veYAKA’s Obtaining and Utility

Obtaining:

• Limited initial distribution: partner protocol allocations, team allocations, community allocations.
• Primary method: locking $YAKA.

Utility:

1. Governance: Beyond Simple Voting

a) Determination of Emission Allocation:

$veYAKA holders’ votes decisively shape the distribution ratio of $YAKA emissions across various liquidity pools, fundamentally influencing the landscape of liquidity allocation within the ecosystem.

Example:

When there are only 3 trading pairs on Yaka Finance (YAKA/SEI, YAKA/USDC, SEI/USDC), and one million $YAKA are emitted in a certain period:

If 5/10 of the votes go to YAKA/SEI, 3/10 to YAKA/USDC, and 2/10 to SEI/USDC, the rewards are distributed as follows:

YAKA/SEI: 500,000 $YAKA rewards

YAKA/USDC: 300,000 $YAKA rewards

SEI/USDC: 200,000 $YAKA rewards

In essence, $veYAKA holders determine the emission allocation ratios, directly influencing the APY for LPs across different pools.

b) Whitelist Determination:

$veYAKA holders’ votes determine which tokens can be whitelisted for Yaka Finance liquidity pools.

Note: Creating a liquidity pool on Yaka Finance is permissionless, but receiving $YAKA reward emissions requires whitelisting.

Example:

When the SEI ecosystem’s meme sentiment is high, two developers release meme tokens: dev1 and dev2 tokens.

If dev1 token is not whitelisted, its dev1/sei liquidity pool cannot receive $YAKA reward emissions. This may discourage LPs from adding liquidity, potentially causing its price to decline continuously.

If dev2 token is whitelisted, its dev2/sei liquidity pool can receive $YAKA reward emissions, attracting more LPs and potentially driving its price upward.

Thus, $veYAKA holders effectively decide the liquidity allocation within the ecosystem.

c) Launchpad Voting:

From the second token listing onward, $veYAKA holders vote to determine which projects can conduct their Initial DEX Offering (IDO) on the Yaka launchpad.

Successful candidates automatically secure a position on the Yaka Finance whitelist, making their trading pairs eligible for $YAKA reward emissions.

This mechanism serves to:

• Ensure community input on project promotion within the ecosystem.
• Align $veYAKA holders’ interests with the platform’s long-term success.
• Add another layer of utility to $veYAKA, incentivizing long-term holding and active governance participation.

2. Yield: Capturing Yaka Finance’s Economic Model Value

a) Trading Fee Income:

$veYAKA holders receive 85% to 90% of the trading fee income. The remaining 10–15% (15% for the first 3 months, then 10% thereafter) goes to Yaka Voyager NFT Stakers.

Distribution to $veYAKA voters is based on their voting share for each trading pair.

b) Bribe Fees:

$veYAKA holders can receive bribes from projects seeking favorable emission allocations or whitelist status.

Example:

If you were dev2 in the earlier example, you might offer bribes to $veYAKA holders to secure more $YAKA emissions for your dev2/sei liquidity pool.

In the protocol’s early stages, the SEI Foundation has committed to providing $10,000 worth of bribes weekly to Yaka Finance after the launch of the ve(3,3) economic model. This commitment, along with funds from Yaka Voyager NFT mints, will fuel ecosystem bribes, offering substantial APR yields to early $veYAKA holders.

c) Weekly Rebase Yields:

To counteract the dilutive effect of $YAKA emissions, 30% of weekly $YAKA emissions are automatically distributed to $veYAKA users in the form of additional $veYAKA.

The following table presents a simulated calculation based on the aforementioned three yield entitlements:

d) Automatic IDO Allocation:

$veYAKA holders receive guaranteed allocations in IDOs conducted on the Yaka launchpad. This benefit enhances the value proposition of holding $veYAKA in three key ways:

• Guaranteed Participation: $veYAKA holders automatically qualify for IDO participation, bypassing complex registration processes.
• Proportional Allocation: IDO allocation size correlates directly with $veYAKA holdings, rewarding long-term commitment.
• Early Access to Vetted Projects: This ensures early access to projects that $veYAKA holders have collectively approved.

Closing Thoughts: Architecting SEI’s Liquidity Landscape

Yaka Finance stands as the cornerstone of SEI’s liquidity infrastructure. Our ve(3,3) model paired with a strategic launchpad cultivates deep, responsive liquidity — the lifeblood of DeFi innovation.

$veYAKA governance ensures precise capital allocation, optimizing efficiency across the network. Strategic alliances amplify our impact, weaving a robust liquidity tapestry.

As SEI’s liquidity wholesale center, we don’t merely participate; we architect the landscape that propels SEI towards DeFi preeminence.

The foundation is laid. The vision is clear. Yaka Finance builds the future of liquidity on SEI, methodically and relentlessly.