xPolyCub all the rage?
Polycub has been up and running 2 weeks now, and many users have taken to the high-yield xpolycub single staking pool. There's a lot to say about how it all works, and many people have no idea. Even I had no idea how it worked when I dumped $23k into this farm 5 minutes after launch. That didn't stop the bag from going to $140k in 48 hours, and then crashing rapidly thereafter to something like $70k.
One of the most important thing to note about xPolyCub is that the listed APY is extremely inaccurate. That is to say that the 710% listed above is only how much yield is allocated to the pool via raw emissions. It currently does not take into account the 50% penalty farm from all the other farms getting rolled into it. Currently many users are taking the penalty, so the penalty farm is actually more than the yield being allocated there directly.
- Yesterday I marked the ratio at 12.3229 at 8:30 PM.
- Today at 12:30 PM the ratio sits at 12.7876.
- This is a 3.77% gain in 16 hours.
- Extrapolate linearly to 5.657% in 24 hours.
- That's 2065% APR.
- 527,452,264% APY.
Of course we know APR and APY assume sustained yields for an entire year, so this data is extremely biased and just outright false, but it's fun to speculate anyway and throw a ridiculous number out there during the hyperinflationary phase.
But how is the ratio calculated?
https://docs.polycub.com/polycub-token/token-supply-and-emission
In the docs it just says...
- Sushiswap (xSUSHI staking contract = xPOLYCUB staking contract)
- Adamant Finance (50% early harvest penalty paid back to xPOLYCUB stakers)
Since no one has bothered to look up how xSUSHI works yet, I figured I'd bite the bullet and answer this question because people have been asking questions in Discord.
https://help.sushidocs.com/products/sushiswap-staking-sushibar-xsushi
When users make trades on the SushiSwap Exchange a 0.3% fee is charged.
0.05% of this fee is added to the SushiBar pool in the form of LP tokens for the relative pool.
When the rewards contract is called (minimum once per day) all the LP tokens are sold for Sushi (on SushiSwap Exchange). The newly purchased Sushi is then divided up proportionally between the xSushi holders in the pool, meaning their xSushi is now worth more Sushi.
Currently you will not see the gained amount until you have withdrawn.
It started as 1 Sushi = 1 xSushi, but just like LP tokens the price of xSushi changes over time depend on how many Sushi rewards are in the pool.
We see that the Polycub platform has adapted this technique and implemented it in a slightly different way. Unlike SushiSwap, Polycub is not a DEX; it does not have exchange fees to pull from to bolster the price of the single-staking pool. Rather Polycub combines the utility of both xSUSHI and Adamant at the same time, pulling yield into xPolyCub with the 90-day timelock that exists on all farms.
Shoot, I was supposed to save that for another paragraph.
Yes, the timelock ("x blocks" in the docs) is 90 days. If you claim before then, 50% of your farm immediately boosts the xpolycub ratio.
So xpc gets two yields.
- Regular emission rate inflation.
- Timelocked penalty farm.
Most of us already knew this.
What I was unsure of is HOW this actually happens; how the ratio is shifted exactly, and over what timeframe.
The newly purchased Sushi is then divided up proportionally between the xSushi holders in the pool, meaning their xSushi is now worth more Sushi.
Essentially what has been done is that xPolyCub & xSushi are actually LP tokens, but they are LP tokens in a single staking pool that measure a user's percent worth of that pool. Once we have LP tokens, they remain a static unchanging number of share tokens, but others can enter the pool behind us and dilute our shares.
For example.
- I entered the xPolyCub pool as soon as I could with 9000 Polycub.
- I received 8400 xPolyCub tokens.
- The current ratio was 1.07 Polycub to 1 xPolyCUB.
- As yield entered the pool it was distributed to all xpc holders.
- If 10k entered a pool of 100k tokens, the ratio would increase by 0.1
- Anyone who wants to enter the pool must match the current ratio.
- Just like a normal LP pool paired to another token.
In essence, an LP which pairs polycub to xpolycub is forged. However, instead of buying xpolycub tokens out of the pool like a traditional AMM, one must instead mint them at the current ratio. This ratio can only increase because when users leave the pool they only end up taking their fair share, leaving behind the exact same ratio. As yield coins continue to pour in, the ratio just keeps going up.
However, once we fully realize how it works, we can also see that the more people are in xpc, the more competition there is, and the harder it is to increase the ratio in the first place. Conversely, if a lot of people exited the xpc single staking pool it would be much easier for the ratio to increase, because the yield is being spread out across less LP tokens.
Pretty weird.
I honestly did not fully understand it until now. And I'm willing to bet only like 10% of the people that read that poor description understand it as well. Baby steps, fam.
Conclusion
Well, I think that's pretty much it. Gonna keep this one short and sweet. I believe I have very accurately described exactly how xpolycub works (perhaps in a clunky way). I feel like if you asked polycub degens how it works 90% of them would not actually know how it works. Such is technology. I don't have to know how to build a car in order to use a car.
Even after a recent price drop of polycub from $1.27 to $1.10, the price of xpc still sits at $14. If I had been a diamond hand and just held it this entire time, my $23k investment of 8400 xpc would be worth $117,600. LOL wow... pure insanity.
Unfortunately, I was not a diamond hand. You know I probably would have been had I known that the APY listed on the frontend was TOTALLY wrong but, you know, I trusted the information I was given. Silly me :D
That being said, don't interpret this as complaining. I may have 'lost some money' in terms of opportunity cost and degenerate gambling, but I rather like my positioning at the moment, and I'm still up quite a bit. So far this has been a very fun experiment indeed.
Surprisingly... at 2000% APR, the xPolyCub pool still isn't crowded and is the most profitable pool by far. On top of that, you don't get penalized 50% for exiting before the 90 day timelock. There is no timelock because there is no harvest. Everything auto-compounds immediately. It's a pretty cool little way of doing it that might even be slightly more secure/efficient than the CUB kingdom because of how it works.