Pounding
Autocompounding Vaults on Alephium (AYIN) Blockchain
Introduction
The Pounding vault for LPs on AYIN offers an innovative solution to maximize returns by automatically compounding ayin rewards into more LP tokens. This documentation provides an overview of how the autocompounding vault operates and its key features.
Autocompounding Process
Stake LP Tokens: Users can stake their LP tokens in the Pounding vault. Once staked, the LP tokens start receiving ayin rewards.
Compound Rewards: The vault automatically compounds these AYIN rewards into additional LP tokens. This process occurs many times per day, enabling significant compounding.
Selling and Restaking: During the compounding process, half of the received AYIN rewards are sold into ayin/alph LP tokens. These are then re-staked into the LP/vault.
Benefits
The high frequency of compounding leads to an expected APY that is approximately at least 2 times higher than traditional LP staking. Despite a 10% fee applied to rewards collected, which supports the development of AYIN, the APY offered by the autocompounding vault remains significantly higher than normal LP staking. This ensures that participants can enjoy attractive returns even after accounting for fees.
Fees Explained
Since it is not posssible to execute a "Harvest" cycle upon each deposit on Alephium, a 0.1% withdrawal fee is charged when withdrawing from pounding. This is redistributed to everyone else in the vault. You will also receive "undeserved" rewards from the vault when joining on the first harvest, despite not being in the pool long enough to accumulate them. This withdrawal fee makes up for that, and prevents exploiting this feature by discouraging consistent re-joining of the pool.
10% of Rewards fee is applied each harvest to support the ongoing development of AYIN. The APY after this fee is still likely to be a consistent 1.5-3x traditional staking , due to the number of compounds per day. If you have the time yourself to compound your LP 4-20x a day, you should do that. This is a "set and forget" vault that maximises returns.
Comparison to Normal Staking
It is worth noting that if users wish to transfer rewards from normal LP staking to Xayin, opting for normal staking instead of using the Autocompounding vault may be a simpler process. The Autocompounding vault is specifically designed to offer enhanced returns and compounding benefits.
Please exercise caution when participating in the beta version and ensure you fully understand the associated risks before staking any LP tokens. This code is not audited by any outside parties.
Background Reward Processing:
Please note that if you do not observe an immediate increase in your LP balance over several hours, it does not necessarily indicate a loss of rewards. The Autocompounding Vault on AYIN operates on a high-frequency compounding mechanism. In some cases, there might be a delay in updating your LP balance due to background processes, such as the run operation catch-up processing. During this time, rewards continue to accumulate in the background.
It's essential to understand that the system is continuously working to compound rewards, even if you don't see immediate changes in your LP balance. Rest assured that your rewards are still accruing, and any delay in updating your balance is typically a part of the processing mechanism rather than a loss of rewards.
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