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yALP Vault: Yield-Bearing Auto-Compounding ALP

One of Amped’s innovative enhancements is yALP, a yield-bearing vault that revolutionizes how liquidity providers earn on the platform.

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Concept and Mechanism

yALP is essentially a smart vault that wraps ALP into an interest-accruing token. When a user deposits ALP tokens into the vault, they receive yALP tokens in exchange, which represent a share of the vault’s assets.

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How It Works

  • The vault stakes the deposited ALP internally
  • Automatically claims and compounds rewards on behalf of users
  • The amount of ALP backing each yALP token grows over time
  • The exchange rate between yALP and ALP increases with each compound event

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EIP-4626 Standard Compliance

yALP adheres to the ERC-4626 tokenized vault standard, bringing several advantages:

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Composability

Any DeFi protocol that recognizes the EIP-4626 interface can easily integrate yALP. For example, yALP tokens could potentially be used as collateral in lending platforms or be added to yield aggregators.

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Standardized Functions

The vault exposes familiar methods like:

  • deposit() and withdraw()
  • totalAssets()
  • Conversion functions between shares (yALP) and assets (ALP)

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Predictable Accounting

The standard enforces precise mathematical relationships between shares and underlying assets, ensuring fair and transparent accounting.

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Key Benefits for Liquidity Providers

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1. Hands-Off Compounding

  • Vault automatically harvests rewards on a regular schedule
  • Trading fees and earned esAMP are periodically claimed
  • Rewards are converted back into additional ALP
  • No manual actions required - true “set and forget”

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2. Operational Efficiency

  • Consolidates compounding into aggregated transactions
  • Reduces overall gas costs
  • Small holders get same compounding rate as large holders
  • More efficient than individual manual compounding

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3. Transferable Liquidity

Unlike staked ALP, yALP tokens are:

  • Standard ERC-20 tokens
  • Freely transferable between wallets
  • Tradeable on exchanges
  • Usable as collateral in other protocols
  • No cooldown periods for transfers

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4. Transparent Tracking

  • Current exchange rate (ALP per yALP) always visible
  • Fair share accounting prevents dilution
  • Anti-exploitation mechanisms built in
  • Real-time value tracking

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5. Secondary Market Price Discovery

  • Market prices yALP based on intrinsic value
  • Expected future yield factored into pricing
  • Arbitrage opportunities between minting/burning and market trading
  • Enhanced liquidity for LP positions

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Technical Implementation

The yALP vault is carefully implemented with security and efficiency in mind:

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Security Features

  • Reentrancy guards on all state-changing functions
  • Pre-deposit share calculation to prevent manipulation
  • Respects underlying ALP cooldown rules
  • Regular security audits

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Keeper Bot System

  • Automated keeper bot triggers compound function
  • Claims all accumulated rewards
  • Redeposits rewards to mint more ALP
  • Operates on optimized schedule for gas efficiency

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Integration Points

  • Seamlessly integrates with existing Amped contracts
  • Maintains compatibility with reward distribution
  • Preserves all ALP staking benefits

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How to Use yALP

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Depositing

  1. Acquire ALP tokens through normal liquidity provision
  2. Navigate to the yALP vault interface
  3. Enter amount of ALP to deposit
  4. Approve and confirm transaction
  5. Receive yALP tokens representing your share

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Monitoring

  • Track your yALP balance
  • View current ALP/yALP exchange rate
  • Monitor accumulated rewards
  • Calculate your total position value

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Withdrawing

  1. Navigate to withdrawal interface
  2. Enter amount of yALP to burn
  3. Confirm transaction
  4. Receive underlying ALP plus accumulated rewards

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Use Cases

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Long-Term Holders

Perfect for LPs who want to maximize returns without active management

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DeFi Integration

Use yALP as collateral or integrate with other yield strategies

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Liquidity Provision

Trade yALP tokens without unstaking or waiting periods

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Institutional Users

Simplified accounting and transferability for larger positions

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Important Considerations

  • yALP value only increases relative to ALP (never decreases)
  • Underlying ALP risks still apply
  • Gas costs for deposits/withdrawals
  • Smart contract risk (though audited and tested)

For more technical details about the yALP implementation and security features, refer to our Whitepaper.