We at Overnight are seeking to expand liquidity provisions for USD+. The empirical advantage of USD+ is that it earns 8–12% APY by deploying its collateral across a wide array of diversified and rigorously tested Yield-Farming strategies. One such ecosystem we’ve had our eyes on is Dystopia and its unique take on the ve(3,3) concept.
USD+: Ushering in the new and enshrining Capital Efficiency
As mentioned previously, USD+ earns its holders’ yields via its deployed strategies. This, in turn, is paid out via rebases on a daily horizon; this makes the stablecoin a safe and lucrative option for prospective yield-farmers — we do all of the legwork for you!
Apart from being a passive income machine, USD+ can also be used in Liquidity Provisions. As it currently sits, derivatives of UNI V2s — Dystopia, Quickswap, Spookyswap, etc — are unable to put their excess liquidity to work by pursuing interest-bearing strategies in a manner similar to that of Curve/Balancer.
USD+ resolves this shortcoming and massively revamps Liquidity Provisions while offering Yield-Farmers increased profitability — a phenomenon that is turning increasingly rare. For more information on this, please refer to the article here.
Offering veDYST holders more returns
USD+ being more attractive for Yield-Farmers holds the keys to unlocking the true value of Liquidity Provisions for its users. USD+ pairs on Dystopia over the past 2 days have witnessed tremendous volume with the USD+/USDC pair achieving the highest daily trading volume on the Dystopian DEX — a testimony to USD+’s unique model.
All of this equates to a unique proposition for veDYST holders — users holding governance rights for the protocol. VeDYST holders allocate their votes for Liquidity Pools of their choice and in return, reap trading fees from those pairs. This ensures that veDYST holders are active stakeholders in the pair that they incentivise and hence, would rationally seek to allocate votes for pairs with optimal trading volumes.
The key for veDYST holders earning more returns on their allocated Liquidity Pools lies in incentivising USD+ pairs — explained below.
1) Earning more trading fees from USD+ Pairs
As mentioned previously, the USD+/USDC pair has raked in a whopping trading volume of $67K+ as of 26/5/22 — this figure is 3.5x higher than the 2nd largest pair on Dystopia.
Considering that trading fees are the most consistent sources of returns for veDYST holders, voting for USD+ would allow them to claim their share of the weekly trading fees — amounting to $236 as of currently. Yep, that’s right, without any additional DYST emissions, the USD+/USDC pair has already generated a hefty trading fee and this figure is likely to be higher if more veDYST emissions were to be allocated.
2) Share of Weekly Bribes
To spice things up for this week, we’re incentivising USD+ Liquidity Pairs via bribes paid in USD+ and they are as follows:
-USD+/USDC (stable pool): 500 USD+
-USD+/wMATIC (volatile pool): 250 USD+
-USD+/wETH (volatile pool): 250 USD+
To claim your share, simply assign your veDYST voting weightage in favour of the above USD+ pairs.
3) Higher ROI in comparison with Opportunity Costs
Voting for USD+ pairs has an incremental return as opposed to other Liquidity Pairs. This means that the opportunity costs for not voting for USD+ pairs are high (in this case the opportunity costs being the share of trading fees & bribes).
The cumulative weekly returns from trading fees & bribes amount to $631 as of currently and from the table below, it can be undoubtedly interpreted as the most lucrative for veDYST holders. In fact, all 3 USD+ pairs currently have the highest returns for allocating voting weightage towards the pairs. Not voting for these pools means you simply lose out on these gains.
The table below shows the $ return on an incremental 100K veDYST voted for a wide array of Liquidity Pools.
This analysis can be viewed here
Closing Comments
Not only can veDYST holders can monetarily benefit by voting for USD+ pools but also, can help improve Dystopia’s ecosystem by enabling Yield-Farmers to earn more returns on their liquidity provisions — a phenomenon that has been lacking in UNI V2 derivatives. Increased yields on Yield-Farming are likely to attract more liquidity to the Dystopian Exchange and hence further benefit veDYST holders.
USD+’s mantra of putting your money to work is invaluable and holds the gateway to revamping and massively improving the capital efficiency of Liquidity Provisions as we know them.
