Yield-enhancing Strategies
Last updated
Last updated
Yield-enhancing strategies use the native UP token of the UpDeFi protocol as a bridge for yield realization, which prolongs the yield release time of the underlying yield protocol, greatly reduces the selling pressure of earned tokens, and enables users to obtain higher returns that the auto-compounding strategies cannot bring.
For projects, because the yield-enhancing strategies do not continuously sell earned tokens like the auto-compounding strategies, it greatly reduces the selling pressure of earned tokens and alleviates the common difficulties in liquidity mining programs. At the same time, because the yield-enhancing strategies can help users to obtain higher yields while the capital cost of the underlying yield protocol remains unchanged, it can help projects to significantly improve capital efficiency and pay minimum capital cost to obtain maximum liquidity and user attention.
Almost all protocol incentive programs (such as liquidity mining programs, transaction mining programs, borrowing mining programs, etc.) currently face the following problems:
How to incentivize users to deposit capital into the protocol in the long run, in other words, how to give more incentives to long-term users.
How to incentivize users not to sell the tokens they earned in the yield programs right away.
The yield-enhancing strategies help projects achieve the purpose of motivating long-term users more effectively without altering projects' ongoing liquidity mining programs.
This is actualized by using the native UP token of the UpDeFi protocol as a bridge for yield realization: the rewards directly obtained by users who deposit assets in the UpDeFi platform's yield-enhancing strategies are UP tokens. These UP tokens will not be released to users immediately, but through a vesting period. By staking UP tokens, users can share the yields obtained by all the assets deposited by users in the mining pool of the underlying yield protocols through the yield-enhancing strategies.
This yield distribution method realizes continuous subsidies for old users:
✅Old users of the underlying yield protocol can get subsidies from new users: the sooner the users invest in an underlying yield protocol through the UpDeFi strategy, the more UP tokens they can potentially be rewarded. By staking UP tokens, these users can share the yields realized by the assets invested by users who enter the strategy after them.
✅Old users of the UpDeFi protocol can get subsidies from new users: the sooner a user invests in the UpDeFi platform the more that user can get in UP token rewards. By staking UP tokens, these users can share the yields realized by the assets invested by users who enter the strategies after them.
The following are the detailed operations of a strategy:
User deposit: The user deposits the principal token corresponding to the strategy into the strategy contract.
Strategy contract deposit: The strategy contract deposits the received tokens into the mining pool of the underlying yield protocol corresponding to the strategy.
The platform harvests the yields and deposits them into the reward pool of the UP-staking strategies: After a period of time, the UpDeFi platform will call the harvesting method of the strategy contract, and get the rewards from the mining pool of the underlying yield protocol during this period of time. The yields are harvested and deposited into the reward pool of the UP-staking strategies.
User withdrawal: Users can freely withdraw their principal deposited on the UpDeFi platform and the UP tokens awarded to users by the UpDeFi platform, at any time.
