This article was written for the BSC Times, a one stop shop for everything you need to stay updated in the BSC space.

The crypto scene is a fast paced, relentless space that never seems to stop, with a new project or two cropping up every single day. Not all projects are brand new innovations however, with a majority starting out as forks or copies of existing projects (Pancakeswap, Apeswap, Pantherswap, Fishswap, Garudaswap… the list is a long one). That’s not necessarily a bad thing per se, since some of these forks go on to become better projects than it’s original, but one can’t help but become desensitized to it all.

So when I was told that an upcoming project would be attempting something completely new and unique in the market, my interest was piqued. Their “whitepaper” or Gitbook is an extensive one, complete with step by step examples and over 23k words detailing their innovative idea. If that sounds like a little bit too much bedtime reading after a hard day at work, you’re in the right place — Luckily for you, I’ve done all the reading so you don’t have to.

Let’s get cracking.

YSL.IO

The official description over at YSL.IO is that its a “cutting-edge DeFi tool designed to optimize and amplify the returns from yield farming platforms, whilst maximizing the benefits of locked liquidity to create a truly unparalleled token economy”.

For all the laymen out there like myself, YSL.IO is a series of vaults.

Unlike the other vaults out there however (Aperocket, Pancakebunny, Beefy to name a few), YSL.IO isn’t focused on just compounding your farming rewards multiple times a day to generate better APY. While compounding IS one of YSL.IO’s features, it’s unique selling points lie in:

1. How it optimizes and amplifies those farming rewards.
2. A referral program that allows benefits both the referrer and referee.

Tokenomics — A quick primer

Before we go on any further, its worth taking a quick minute to understand the tokenomics of the YSL.IO platform. There will be 3 different tokens and I’ll cover each of these in more detail in the following sections:

1. YSL — The utility token
2. sYSL — Rewards from using the services on the YSL.IO platform (optimization/amplification/referrals etc)
3. aYSL — Used in amplification

YSL token

Being an inflationary token that has no upper supply limit, there are 10 different scenarios in which YSL is minted and paired with BUSD to create LP tokens in the YSL-BUSD pool on Apeswap, with the LP tokens instantly locked away for 1000 years.

That means that regardless of whether a user is buying, selling or even just harvesting their rewards from the vaults, the amount of locked liquidity in the YSL-BUSD pool increases. Over time, this will result in a large enough liquidity pool that it becomes very difficult for any one person to affect the price of YSL (price stabilization).

YSL’s goal = Continuous generation of YSL-BUSD locked liquidity resulting in a stable YSL price.

The YSL tokens’ pursuit of a stable price has a secondary benefit in that it reduces the risk of impermanent loss. Users will be able to earn buyback and inflation rewards by staking their YSL-BUSD LP tokens in the vault, feeling safe in the knowledge that the more locked liquidity is being created, the lower the risk of impermanent loss.

sYSL token

The sYSL token is the method in which users will truly profit from the YSL.IO platform. The important thing to understand here is that the sYSL price is pegged to the amount of liquidity locked in the YSL-BUSD pool on Apeswap.

The larger the pool of locked liquidity, the higher the price of sYSL

As we’ve discussed before, there are 10 different scenarios that result in the continuous generation of locked liquidity. Because of this feedback loop, over time the price of sYSL will only appreciate — Here’s a quick example:

1. Someone harvests their sYSL rewards from the vaults and decides to sell it.
2. The sale of sYSL triggers the creation of more locked liquidity in the YSL-BUSD pool
3. The price of sYSL increases since there’s now more liquidity locked away in the pool

Confused? Don’t worry, I was too. Luckily there’s a great example (complete with the exact formulas and numbers!) from the YSL.IO teams’ gitbook that we’ll take a look at in a minute under the Optimization section that takes us through this process.

Optimization

Optimization is the first innovative function that YSL.IO will bring to the table. Via the creation of locked liquidity, YSL.IO will boost the APR of a user’s LP tokens by 300% compared to what you’d normally get by farming on Apeswap or Pancakeswap.

Sample farm on Apeswap

Providing liquidity in the BANANA-BNB farm on Apeswap would net you 249.13% in returns after a year. Instead, depositing those same BANANA-BNB LP tokens into a YSL.IO vault would see your returns increased to 746.19%.

“How is this possible?”, you might ask. Initially, the math doesn’t seem to add up. If YSL.IO only earns 249.13% in BANANA from Apeswap, how can it afford to pay out to its users 746.19% in sYSL? Fret not, I highly recommend you check out this great step by step example which dives into the math behind how this all works.

Amplification

The second innovative function that YSL.IO is bringing to the market, there are 2 types of amplification that will be available to all users — Strategy 1 amplification and Strategy 2 amplification.

Strategy 1 Amplification

This is the default strategy that will be activated so long as a user deposits LP tokens into any vault on the YSL.IO platform. Doing so will automatically add 1% APR on top of what the user would normally earn via optimization.

Going back to our earlier example, the final APR for a user who deposited BANANA-BNB LP tokens would be 747.19% (746.19% from optimization and 1% from amplification).

Strategy 2 Amplification

Unlike in strategy 1, strategy 2 consists of different tiers which will see a users farming APR boosted by a minimum of 2% to a maximum of 100%. Activating strategy 2 however, is not “free” and will require the user to have a certain amount of aYSL tokens.

In order to activate the full 100% boost from strategy 2, a user would have to provide 400% of his TVL as aYSL. The example in the YSL.IO teams’ gitbook is not as clear so let’s take a quick look here.

In this scenario both users are staking a total of $50,000 in a YSL.IO vault that initially gives 11.58%, but due to market conditions, drops to 3.58% after 6 months.

User 1 — Strategy 1 Amplification

1. A controller fee of 0.4% is taken [11.58–0.4 = 11.18%]
2. Optimization boosts the APR by a factor of 300% [11.18% x 3 = 33.54%]
3. Strategy 1 amplification gives you +1% [33.54+1 = 34.54%]

• Total reward after 6 months is $50,000 * 34.54% / 2= $8635

APR now drops to 3.58% in the middle of the year so:

1. A controller fee of 0.4% is taken [3.58–0.4 = 3.18%]
2. Optimization boosts the APR by a factor of 300% [3.18% x 3 = 9.54%]
3. Strategy 1 amplification gives you +1% [9.54+1 = 10.54%]

• Total reward after 6 months is $50,000 * 10.54% / 2= $2627.5

The final amount earned after a year is $8635 + $2627.5 = $11262.5

User 2 — Strategy 2 Amplification

1. A controller fee of 0.4% is taken [11.58–0.4 = 11.18%]
2. Optimization boosts the APR by a factor of 300% [11.18% x 3 = 33.54%]
3. Strategy 1 amplification gives you +100% [33.54+100 = 133.54%]

• Total reward after 6 months is $10,000 * 133.54% / 2= $6677

APR now drops to 3.58% in the middle of the year so:

1. A controller fee of 0.4% is taken [3.58–0.4 = 3.18%]
2. Optimization boosts the APR by a factor of 300% [3.18% x 3 = 9.54%]
3. Strategy 1 amplification gives you +100% [9.54+100 = 109.54%]

• Total reward after 6 months is $10,000 * 109.54% / 2= $5477

The final amount earned after a year is $6677 + $5477 = $12154

In the end, whether or not you choose to activate Strategy 1 or 2 amplification will depend on your risk appetite and your assumptions for the market. Of course, if the APR in the example above remained constant throughout the year then Strategy 1 would have been more beneficial. Ultimately, this just provides an additional strategy amongst the many out there for you to choose from.

Ending Thoughts

Seeing as this is a sponsored article, I’ll skip my personal thoughts and whether or not I’ll be investing into the project. Instead, in the remaining time before YSL.IO launches on the 30th of June 2021, I highly recommend you check out their gitbook and DYOR regarding some of the topics I briefly touched on above.

Signing off for now.

If you liked the article, check me out here on Twitter and Medium where I write about other crypto topics I stumble across.