YLP

What is YLP?

YLP is a token representing liquidity providers. It is minted based on real cryptocurrencies and can be exchanged back into actual cryptocurrencies. Users holding YLP tokens can earn profits through transaction fees and can also profit from selling LP tokens when the YLP price increases. In version V4, liquidity providers can use high leverage to increase liquidity.

Buy YLP

Any user can add liquidity into the fund pool by purchasing YLPs. Each fund pool has a corresponding net value(YLP Price), which can also be regarded as the price of the YLP token. When users buy YLPs, they will receive an amount of YLPs based on the current net value of the fund pool. The purchased YLPs will be displayed as LP positions in the LP system.

When a fund pool is created, the initial net value is set to 1. The net value is determined by the sum of the fund pool's accumulated unrealized profits and losses (PNL), funding costs, and borrowing costs. The formula for calculating the net value is as follows:

YLP Price = (Available liquidity + Occupied liquidity + Unrealized PNL of positions + Receivable funding costs) / Total amount of YLP

Amount of YLP = Margin * Leverage / YLP Price

Sell YLP/Close LP Position

If users wish to withdraw funds from the liquidity pool, they can sell their held YLP tokens (if sfLP is used in the Earning System to participate in iYFX Vesting, sfLP must be redeemed before withdrawing from the liquidity pool), which is represented as closing LP positions in YFX V4. The amount of assets users can retrieve is determined by the net value of the liquidity pool at that time:

Assets obtained by the user = Margin+YLP quantity * (exit YLP price - entry YLP price)

YLP Liquidation

Liquidation price = Entry Price*(1-1/Leverage)*(1 + Maintenance Margin Rate)

Bankruptcy

Due to the leverage added to the liquidity pools in YFX V4, although highly unlikely, there is still a possibility that the funds in the liquidity pool could be entirely lost to the Taker. This condition is referred to as a bankruptcy state. The YLP price at this state is called the bankruptcy YLP price. The index price at this state is called the bankruptcy index price. All the positions from takers and makers will be closed at a uniform price, remaining funds will be returned to their wallets and the system will be rebooted.