Levf Finance - Leverage yield farming risk adjustment protocol
Levf bridges the capital and risk limitations of participants, creating additional opportunities for both.
Liquidity providers can supply assets to interest-bearing supply pools to earn high interest on their assets.
Leverage yield farmers can provide accepted collateral for the protocol to leverage yield farm cross-protocol on behalf of the leverage yield farmer.
Suppliers of leverage get interest-bearing supply tokens. Leverage yield farmer pays interest in exchange for leveraged yield farming. For the additional risk, leverage yield farmers can earn an even higher APY.
Leverage farmers keep tokens farmed, not dumped/converted to the underlying currency.
Levf can generate high lending rates for assets by enabling the leverage yield farmers to take on leverage by borrowing from asset supply pools and paying the asset's interest rate. Leverage yield farmers effectively increase their yield farming and trading fees APY.
Interest on asset supply is determined by the rising interest rate curve. Interest rates range from 5% to 100% APY according to utilization of pool.
This ensures that leveraged yield farmers can leverage yield farm profitably, and also sufficient liquidity at all times for treasury pool stakers to unstake.
Epochs are time periods of 1 week, and is used to calculate distribution of LFI for liquidity mining. LFI rewards are set aside per pool for each given epoch. Number of LFI liquidity providers are entitled to is calculated based on the amount of liquidity provided multiplied by time staked as a proportion of total liquidity of the pool. If liquidity is unstaked during the epoch, LFI rewards accrued for that epoch are forfeited and distributed equally to the rest of the liquidity providers.
The insurance fund is to insure asset suppliers against individual platform risk of farming pools.
Net profit on leverage yield farmed taxed 10% with proceeds going to insurance fund upon settlement.
Levf tokens staked are entitled to the insurance fund, which pays out when the fund reaches a certain threshold.
Asset supply treasury pools
Although initially launching with DAI pools only, the model will be replicated for the following assets in the near term.
Total token supply: 100000 LFI
Liquidity mining: 75% of total token supply
Team, developers, and initial backers: 25% of token supply (tokens to be unlocked alongside liquidity mining)
The liquidity mining phase will be over 20 epochs. With 3750 tokens distributed each epoch across liquidity pools.
Levf tokens will be rewarded to incentivize asset supply liquidity pools and leverage yield farming.
They will have the following utility:
1. Vote in governance polls.
2. Create governance proposals.
3. Decide changes in interest rates.
4. Vote on new protocols to adapt to.
5. Owner of the insurance fund.
6. Stake for payout from the insurance fund.
7. Own the smart contracts.
8. Decide on new features.
9. Stake for additional leverage.