Yield Farming

Yield Farming OXS/USDT

Yield farming allows you to earn extra rewards by providing liquidity to the OXS-USDT pool on QuickSwap. When you do this, you receive LP tokens that earn trading fees. By staking these LP tokens in a yield farming contract, you get additional rewards, such as more OXS tokens. Currently, this is available on QuickSwap, but in the future, more DEXs will offer the opportunity to obtain and stake these LP tokens in a unified yield farming contract, maximizing your earnings.

Yield Farming Staking

$$Y_{stk} = R \times \left( \frac{\omega_{Group}}{\sum \omega_{All\ Groups}} \right) \times \left( \frac{\text{User Productivity}}{\text{Total Group Productivity}} \right)$$

• Ystk​: Staking reward for the individual user.

• R : Total reward available for distribution in the staking system.

• ωGroup: Weight or importance of the specific group to which the user belongs.

• ∑ωAll Groups​: Sum of the weights or importance of all groups considered in the staking system.

• User Productivity: The productivity or contribution of the individual user in the staking system.

• Total Group Productivity: The total productivity or contribution of the entire group to which the user belongs in the staking system.

The formula shown describes how the interest or rewards will be calculated when you lock your LP tokens, obtained from adding liquidity to the pool, in a yield farming staking contract. The variable 𝑌 stk Y stk ​ represents the staking reward for the individual user, and the variable 𝑅 R is the total reward available for distribution in the staking system.

It's important to note that 𝑅 is the same as the one used in regular staking. What differentiates the amount of tokens allocated between staking and yield farming is determined by the formula involving the weights ( 𝜔 ω), which represent the importance or weight of the group to which the user belongs. The formula ensures that rewards are distributed proportionally based on the group’s contribution and individual productivity within that group.

Yield Farming Fees

Formula 1

Explanation:

• Xinit​: This is the initial fee percentage applied when tokens are first locked into the yield farming pool. For example, this could be set at 15%.

• Xfin​: This represents the final fee percentage that applies after the maximum lockup period has been reached. For instance, this could be as low as 2%.

• Smax​: This is the maximum lockup period, often defined in weeks or months (e.g., 52 weeks). It represents the longest period that tokens can be locked in the yield farming pool.

• S: This variable represents the actual amount of time that the tokens have been locked so far.

How it works:

The first part of the formula calculates a dynamically decreasing fee over time. Initially, the fee is high, starting at XinitX_{\text{init}}Xinit​, and gradually decreases as the tokens remain locked. The decrease is proportional to the fraction of the lockup period that has passed. The longer the tokens are locked (increasing SSS), the closer the fee gets to XfinX_{\text{fin}}Xfin​. This setup encourages users to keep their tokens locked for a longer period to benefit from lower fees.

Formula 1.2

$$V = \begin{cases} \sigma_{daily} - \sigma_{threshold} & \text{if } \sigma_{daily} \geq \sigma_{threshold} \\ -(\sigma_{threshold} - \sigma_{daily}) & \text{if } \sigma_{daily} < \sigma_{threshold} \end{cases}$$

Explanation :

• σdaily:This represents the daily volatility or daily standard deviation. It is a measure of how much a financial metric (such as the price of a token or asset) fluctuates in a single day.

  • Example: If σdaily​ is high, it indicates that there is significant daily fluctuation in the asset's value.

• σthreshold​:This is the threshold volatility or benchmark standard deviation. It is a predefined value used to compare against the daily volatility to determine whether the daily fluctuations are considered high or low.

  • Example: A σthreshold\sigma_{\text{threshold}}σthreshold​ might be set based on historical data or a specific risk tolerance level.

• V:This is the adjustment factor calculated based on the difference between daily volatility σdaily​ and threshold volatility σthreshold​.

  • The value of V can be positive or negative, depending on whether the daily volatility is above or below the threshold.

The formula is designed to dynamically adjust a rate, such as a fee or interest rate, based on the current market volatility. When daily volatility exceeds a predefined threshold, the adjustment factor 𝑉 V becomes positive, indicating more uncertain or risky market conditions, which justifies increasing the rate or fee. Conversely, when daily volatility falls below the threshold, 𝑉 V becomes negative, reflecting calmer market conditions, which justifies lowering the rate or fee. This approach allows for a responsive adjustment of rates in line with market fluctuations, managing risk and reward effectively.

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