Yield Optimizing Liquidity Aggregator Protocol (YOLAP) was a 24-hour hackathon project developed in 2021 that is no longer maintained. This overview describes the original design and goals of the yield optimization protocol.
Overview of YOLAP
The YOLAP works like a robo-advisor for yield farming, automatically harvesting and compounding rewards into a charitable pool – it’s like having a smart money manager automatically invest your coins in the best opportunities to maximize growth, while donating the profits to charity. Just as robo-advisors make investing easy for beginners, YOLAP takes the hassle out of decentralized finance yield optimization, letting everyday people earn lucrative staking rewards hands-free while also supporting good causes.
This auto-compounding and auto-harvesting system is designed to generate higher yields for liquidity providers compared to manual yield farming. Additional benefits include reducing taxable events, dividing gas fees, and incentivizing reward tokens to maintain value.
Protocol
The protocol runs on the Fantom blockchain and has a simple web3 user interface that connects via MetaMask wallet. The YOLAP tokenomics include extensions of Yearn Finance’s YFI token and SushiSwap’s governance model.
Charitable Angle
One aspect that makes YOLAP unique is its charitable focus. All proceeds from the protocol’s operations are donated to nonprofit organizations. This provides a social impact dimension to participating in DeFi yield farming.
The competitive rewards token landscape incentivizes quality assets that maintain value over time. This benefits users compared to other protocols with rapidly devaluing rewards. The donations also allow YOLAP to operate as a non-profit organization.
Eliminating Manual Yield Farming
Manual yield farming requires regularly harvesting and compounding reward assets. This can be a time-consuming and operationally complex process. YOLAP automates these activities so users can take a hands-off approach to earning farming rewards.
The auto-compounding functionality recycles earned tokens back into the deposited assets. This continually increases the base position size and yields. Auto-harvesting claims rewards and adds them to the pools automatically. This simplifies yield farming to a set-and-forget user experience.
Reducing Taxable Events
Manual yield farming often creates multiple taxable events over a year as rewards are claimed and sold. YOLAP reduces tax obligations by automating compounding within the protocol. Only withdrawals are taxable events.
This approach essentially deferred taxes until assets are withdrawn. By keeping assets continuously reinvested, compound growth is maximized. Reduced tax drag improves net yields over manual harvesting and compounding methods.
Dividing Gas Fees
Transactions on Ethereum and other networks require gas fees. For protocols involving many transactions like yield farming, these costs can accumulate.
By aggregating funds into pooled contracts, YOLAP divides gas costs among many users. This makes individual yield farming participation more gas-efficient. Automation further reduces total fee outlays by minimizing unnecessary transactions.
Incentivizing Quality Reward Tokens
The competitive DeFi landscape drives innovation and token launches. However, many reward tokens experience dramatic value deterioration over time. This erodes real yields for liquidity providers.
By selling reward tokens and donating proceeds, YOLAP applies downward price pressure to low-quality assets. This incentivizes projects to maintain meaningful, stable rewards that benefit users. The continual recycling into base tokens then maximizes compound growth.
Conclusion
YOLAP brings an inventive approach to DeFi yield aggregation. By automating compounding and harvesting, it streamlines earning liquidity provider rewards. The protocol also uniquely donates all proceeds to charity while incentivizing quality reward tokens.
With accessible yield farming, reduced taxable events, optimized gas costs, and philanthropic aims, YOLAP offers an impactful new platform. The project combines simplified operations, maximized yields, and social good – an appealing value proposition in the evolving DeFi ecosystem. With its innovative design and focus on users, YOLAP has strong potential as an automated, charitable yield aggregator.
Acknowledgements
YOLAP was a 24-hour project developed during the 2021 Dorahacks hackathon, where it secured 2nd place. Since then, it has not been maintained by any of the original team members.
https://github.com/alibkaba/YOLAP
This article was enhanced with the assistance of AI for content development.
