Token Utility Roadmap— DeFi 2.0 Protocol-Owned Liquidity and Tokenomics
Over the past couple of weeks, our engineers and Data Scientist have been reviewing community feedback and ideating sustainable strategies to promote increased $APY token utility. In last week’s update, we shared the results of our research. This update further explores our action plan and the next steps we will take to implement the new mechanics. Let’s get into it.
The overarching objective of increased token utility is decentralizing the platform through building liquidity depth with platform-owned liquidity (POL) and broadening opportunities for token holders to earn rewards, to serve token holders and platform users alike. Achieving further decentralization and POL, together, will create long-term platform sustainability.
Liquidity Provision & Building Sustainable Protocol-Owned Liquidity (POL)
We plan on building liquidity depth through enabling protocol-owned liquidity. Protocol-owned liquidity is issued as bonds so that liquidity is bound to the protocol, maximizing liquidity and improving capital efficiency, without being subject to user-supplied liquidity. Increasing liquidity depth and liquidity provision is foundational to enabling all other aspects of tokenomics.
The team explored DeFi 2.0 mechanics such as Olympus Pro’s bonding market and Gelato G-Uni to generate more protocol-owned liquidity. The result will be increased liquidity depth for the $APY token, of which all token utility is based on.
The bonding market allows $APY token holders to earn yield for providing liquidity, without exposing them to impermanent loss.
The benefits of protocol-owned liquidity are more sticky liquidity, yield stabilization, and ensuring enough liquidity is available to enable and incentivize all other aspects of token utility.
Some ways the platform will generate protocol owned liquidity through different types of bonding markets are:
- Buying token liquidity in the form of APY/ETH LP tokens
- Buying platform liquidity by issuing bonds for user’s stablecoins
A proposal for deploying the Olympus Pro bonding market is available on Snapshot. $APY governance token holders can head over to vote.apy.finance to submit their vote now.
*Note: users providing UNI & BAL LP are now able to vote on governance proposals with their staked $APY tokens.
Tokenomics & Token Utility
Once the Olympus Pro bonding markets begin generating platform-owned liquidity to aid in incentivizing token utility mechanics, we can implement additional token utility actions in major areas of platform operation. Expansion in each of these areas of platform operation will enable opportunities for single-sided staking for $APY token holders to stake and earn rewards without the risk of impermanent loss.
Governance
In addition to the currently active governance features including the ability to vote on governance proposals, $APY token holders will have the option to lock tokens used for voting.
Vote-locking tokens will allow token holders to lock up their tokens for a set duration, earning rewards for participating in governance proposals during the time their tokens are vote locked.
Insurance
We will expand insurance token utility by rolling out a stability treasury where users can stake their $APY tokens in exchange for rewards. In the case of a shortfall emergency event, a portion of the liquidity locked up will be liquidated and used to cover the shortfall event. Insurance offers users single-sided staking for their $APY tokens and aids in covering user’s loss of funds in the rare case of an active strategy or platform exploit.
Platform Management
Platform management refers to the functions of the platform required for ongoing management of the system. The team has proposed several actions that can be performed by users or by Keeper-style bots. By staking a predetermined amount of $APY tokens, a user can gain permission to perform platform actions and earn rewards for doing so. The first actions to be released will include basic platform operation mechanics, such as running a daily “claim rewards” script. As actions increase in complexity, the required staked amount of $APY tokens to perform actions will increase, along with relative rewards.
Liquidity Provision
The Olympus Pro and Gelato G-Uni bonding markets will aid in ensuring adequate liquidity is available to sustainably incentivize all of the other token utility mechanics. This is the foundation for enabling all other elements of tokenomics.
Wrap-Up
We hope this provided a valuable insight into the exciting next phase of APY.Finance on the journey toward increased decentralization, and a self-sustaining platform, opening many opportunities for platform users and token holders alike. We appreciate your continued support as we take APY.Finance to the next level.
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