🚀Boost

How veDFX can boost DFX rewards for Liquidity Providers

Boosting your Yield

TL;DR: A user receives boost based off of how much they provide to an LP, how much the total LP is, the amount of veDFX you have and the total amount of veDFX in circulation. 🧠

Owning veDFX increases a user's influence in collecting specific yield rewards distributed by the protocol. Most rewards distributed directly through the protocol qualify for veDFX boosts. However, external yield opportunities endorsed by other protocols (such as Aura, Telcoin, etc.) or available on other chains aren't eligible for veDFX boosts as they operate independently of the DFX protocol.

It's important to note that a veDFX boost doesn't augment the overall reward emission; rather, it's an additional boost allocated to each farmer's yield based on their veDFX balance.

Boost Computation

The DFX staking contract model, borrowed from Curve, employs a similar boosting mechanism. This model operates under the assumption that an address holding veDFX contributes more liquidity than it actually does.

Within a gauge, owning veDFX enhances a liquidity provider's share of the pool, thereby increasing the rewards received. Liquidity providers without veDFX are treated as contributing 100% of their liquidity. If an address possesses sufficient veDFX, the contract treats it as adding up to 250% of its original liquidity, equating to a 2.5x boost compared to the base 100%.

This 2.5x multiplier in liquidity provided results in a corresponding boost in rewards, dependent on the total liquidity in the pool and its calculation by the boost calculator.

The formula to calculate earning weight is below:

Earning weight = ((user_lpt × 40) + ((pool_total_lpt × user_vedfx) / total_vedfx) × 60) / user_lpt If a liquidity provider holds no veDFX, they will have an earning weight of 40, or in other words, the contract considers them as providing 100% of their liquidity. On the other hand, if a liquidity provider does hold veDFX, they can have an earning weight between 40 → 100, depending on how much veDFX they hold (e.g., a liquidity provider with an earning weight of 80 is considered by the contract as providing 2x of what their actual liquidity is).

Note: As the quantity of veDFX owned by liquidity providers on a pool increases, the amount of rewards received by non-veDFX holders decreases, as they represent a smaller share of the liquidity.

Rewards Received - Examples

Now that we understand how veDFX holders get a boost on capital compared to non-holders, let’s look at how this translates into an actual boost on rewards received.

Wallet A and B are providing 100 of liquidity each in pool P.
They are receiving 50% of the rewards each.

Now, let’s say that A owns the total supply of veDFX.

The boost calculator now considers that A brings $2.5 \times100 = 250$ of liquidity to the pool.
Wallet A now owns $\frac{250}{250+100} = 71.5\%$ of the pool, and wallet B owns 28.5%.
Wallet A rewards multiplier is at 1.43x (from 50% to 71.5%).

Example 2: Two holders of veDFX, with different shares of the LP:

Now say that wallet A provides 100 and wallet B provides 9900.
If none of them hold veDFX, they are respectively earning 1% and 99% of the rewards.
Now let’s consider that A owns 1% or more of the veDFX supply (i.e. as much as or more than its share of the pool).
Again, the boost calculator now considers that it brings $2.5 \times100 = 250$ of liquidity to the pool.
Therefore, wallet A is now earning $\frac{250}{250+9900} = 2.46\%$ of the rewards, or a 2.46x multiplier.
On the other hand, if wallet B, which owns much more liquidity than A, had 1% of the veDFX supply as well, its considered liquidity would go from 9900 to: $9900 + 1.5 \times 10,000 \times 1\% = 10050$
Its share of earnings would go from 97.54% to: $\frac{10050}{250+ 10050} = 97.57\%$ A very small increase compared to wallet A.
In this situation, wallet A share of rewards and boost would go from 2.46% to: $\frac{250}{250+ 10050} = 2.43\%$

Example 3: Introducing wallet C:

Staying in example 2's situation, let's introduce a wallet C providing 2000 of liquidity. In this case, the considered liquidity for B and C becomes:

Wallet B considered liquidity: $9900 + 1.5 \times 12,000 \times 1\% = 10080$
Wallet C considered liquidity: $2000 + 1.5 \times 12,000 \times 1\% = 2180$

And Wallet A, B, and C share of rewards become: $\texttt{wallet A: }\frac{250}{250 + 10080 + 2180} = 2\%$

$\texttt{wallet B: }\frac{10080}{250 + 10080 + 2180} = 80.58\%$

$\texttt{wallet C: }\frac{2180}{250 + 10080 + 2180} = 17.42\%$

Remarks

As per the formula, LPs with a larger pool share require a larger share of the veDFX supply to substantially enhance their boost. Conversely, LPs with a smaller initial pool share experience a greater increase in rewards.

Note: Due to the complexity of the boost calculation, manual calculations can be challenging, and users are advised to use our calculator on the lock page for accurate results.

Terminology

Gauges: Each liquidity pool has one and their weight (emission amount) is dependent on how the veDFX holders vote.

Epoch: The time it takes for a certain amount of blocks on the chain to be completed.

Emission: The rate and amount of rewards released to that gauge.

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Last updated 2 months ago