The Role of EPX in Ellipsis 2.0
Ellipsis.finance is an authorized fork of Curve.fi. Version 1.0 has been providing Curve’s StableSwap protocol to users on the BNB chain. Version 2.0 (announced here) introduces various updates to the tokenomics, bringing Ellipsis more in line with the Curve’s veToken mechanics. Users that lock the Ellipsis protocol token for up to one year will be able to:
- vote on pool incentives
- receive boosted yields as an LP
- receive platform fees
- vote on eligibility of pools to receive incentives
Ellipsis 1.0 had EPS staking for platform fees. Ellipsis 2.0 will have EPX locking for platform fees, voting on the eligibility of pools to receive incentives and reward rates, and to get boosted rewards for lockers’ liquidity positions.
👉 The information below pertains to Ellipsis 2.0, which launches on April 13th according to the timeline outlined here.
Ellipsis uses pools of tokens to facilitate swaps on its platform. A fee is taken on each swap and split between liquidity providers and EPX lockers. The deeper the liquidity a pool has, the larger a swap it is able to facilitate without significant slippage. As such, deep liquidity is important to attract larger volumes and earn more fees.
But how to get more liquidity?
Protocols will offer their own token as a reward to liquidity providers to attract liquidity, and sometimes allow other tokens to act as rewards too (“third party rewards”, like the LIQR rewards on the USDL and BNB-l pools).
Ellipsis 2.0 will provide EPX rewards to pools and also allow these third party rewards. In this article we will cover EPX rewards.
Enabling rewards on pools
Not all pools on Ellipsis will be eligible for EPX rewards. In order to enable EPX rewards for a pool, an EPX locker with sufficient vote weight must propose a pool approval vote and that pool must pass the vote.
If the vote passes the pool will be permanently enabled for receiving EPX rewards.
EPX reward distribution
Each week EPX lockers will be able to vote on which approved pool they would like to direct EPX rewards to. When voting closes, 1/4 of that month’s EPX rewards is split according to the vote and supplied to the pools.
Votes are reset to zero each week and the voting cycle starts again.
Locking EPX for vote weight
Users lock EPX to get vote weight.
EPX can be locked for periods from 1 to 52 weeks. Locking 1 EPX for one week equals 1 vote weight or vote locked EPX (“vlEPX”; these are not tokens, they represent a quantity of vote weight). If you lock 1 EPX for 52 weeks you get 52 vlEPX.
A lock’s vote weight decreases every week. For example, if Alice locks 10 EPX for 10 weeks she has 100 vlEPX in that first week (10 x 10). She has 90 the next week (10 x 9), 80 in the next (10 x 8) and so on. She can choose to re-lock any locks that are less than 52 weeks long, restoring her locks to maximum weight.
When a lock expires, it has 0 vlEPX value and Alice can claim her EPX. EPX claimed from expired locks will stream out over seven days. Please note that an expired lock cannot be relocked; it must be streamed out first and then locked again.
Rewards for EPX locking
EPX lockers will receive their share of platform fees based on each user’s lock weight. These fees will be paid out in the tokens as they are collected; so fees in renBTC will be available as renBTC, BUSD will be available as BUSD etc.
Fees are collected over one week, and then paid out the following week. For example, fees collected from day 1 to day 7 (Week 1) will be paid out between day 7 and day 14 (Week 2).
vlEPX weights used for distributing the fees are from the corresponding week. So the vlEPX weights at the end of week 1 will determine how the fees from Week 1 are credited.
Alice has 50% of the vlEPX at the end of Week 1, Bob has 30% and Charlie has 20%. When the fees for Week 1 are streamed out in Week 2, Alice will receive 50% of the fees, Bob 30% and Charlie 20%.
Locked EPX gives a reward boost of up to 2.5x to liquidity providers in Ellipsis. A detailed explanation for reward boost will be provided in the forthcoming documentation.
EPS allowed holders to lock and stake for platform fees and EPS penalties.
The penalty functionality is gone from Ellipsis 2.0 — making it easier for other projects to integrate with Ellipsis.
EPX can be locked for up to 52 weeks and used to:
- collect platform fees,
- vote to approve pools for rewards,
- vote to determine which pools receive rewards,
- get boosted rewards for liquidity provision.