A Detailed Explanation of Symblox Yield Farming

As Symblox yield farming is launching in a matter of days, I’d like to take this opportunity to talk about all the nitty-gritty of our yield farming.

Firstly, let’s overview all the major components, which include 2 staking pools, 1 reward manager with the Symblox token, and 2 connectors that strive to give users, especially for DeFi newbies, a better user experience. The details are as follows:

The first staking pool, called Seed Pool, is the wrapped VLX token, allowing anyone to deposit VLX tokens and get an ERC20 standard WVLX token back.

The second staking pool, called the Swap pool, is a modified Balancer. The original Balancer on Ethereum only supports ERC20 tokens. The changes that were done were to enable the new Balancer to accept native tokens, which is VLX. Users can also swap between VLX and SYX using the Balancer. We will write another article to discuss in detail the swap aspect of Balancer.

The third component includes RewardManager and SymbloxToken. SymbloxToken is a standard ERC20 token implementation but also has a Compound-like governance mechanism. RewardManager solely owns it, and RewardManager is the only one that can mint SYX tokens. It has all the rules defined for how to distribute new SYX tokens to different staking pools.

The last component is the connectors, which correspond to the staking pools. The connectors are to improve the user experience by automating the process of depositing and withdrawing. For depositing, a user sends their tokens to a connector, which then deposits the tokens to the corresponding staking pool selected by the user; collects the pool tokens; and deposits them to the RewardManager for the user, which all happens in one transaction. The same applies to the user’s withdrawal but in reverse. To ensure each user’s assets are sound and secure, a new connector contract is deployed for any user when she first deposits to any of the staking pools; thus, there’s a “Join” button for new pools.

Figure 1. Symblox workflow chart

The next thing to notice is that there will be only one million SYX tokens to be minted. The total yield farming duration is 8 weeks, but the first 2 weeks will have a bonus of three times more than the regular rewards. Considering VELAS block confirmation time is 5 seconds average, which equates to 17,280 blocks per day, we can estimate that there will be about 0.6889 SYX per block, which is going to be about 11,905 SYX per day for normal rewards. The first 2 weeks of the bonus will be 2.0067 SYX per block, which is about 35,714 SYX per day.

Table 1. SYX distribution over time

Based on the above math, we can surmise it will be more profitable to get involved in yield farming as early as possible because the first 2 weeks will give out 50% of the total minted SYX tokens.

Besides the timing, to pick which pool to farm is also important. Currently, there will be only two pools. The first pool, which is called Seed Pool, only accepts VLX tokens. Because SYX tokens are not pre-mined, we have to allow users to get SYX tokens by only staking VLX in the beginning.

The second staking pool, called Swap Pool, accepts both VLX and SYX. For the Swap Pool, the value ratio between VLX and SYX is 80:20, meaning that if the exchange rate between VLX and SYX is 2:1, for every 8 VLX in the Swap Pool, there needs to be 1 SYX.

The SYX rewards distribution for each block is split into 20% and 80%, where 20% of SYX rewards go to the Seed Pool, and 80% goes to the Swap Pool. The reason behind that is because we want to incentivize users to provide liquidity to the Swap Pool, so everyone gets smaller price slippage and better liquidity. There’s also a small 0.3% fee incurred to trades on the Swap Pool. The fee goes to all the liquidity providers for the Swap Pool.

Table 2. SYX distribution between the pools

To sum up, we can see that the best way to participate in Symblox yield farming would be to get involved as early as possible. Stake some VLX to the Seed Pool to get SYX tokens, and then move both VLX and SYX to the Swap Pool to earn SYX faster. One catch here is that for the Swap Pool, users cannot deposit more than half of the amount of any tokens in the pool, and cannot withdraw more than ⅓ of the token balance in the pool in one transaction. For example, if there’s only 300,000 VLX in Swap Pool, the maximum amount of VLX you can deposit to Swap is 150,000 VLX, and the maximum withdrawal would be 100,000 VLX.

Symblox is a decentralized synthetic asset issuance and trading protocol on the blockchain. https://symblox.io