1). This is true. An exponential rise in the POLYCUB price would = a significant increase in revenue needed for buybacks. That being said, the rise in POLYCUB price also leads to other positive downwind effects - namely, more bridge revenue, more capital staked on PolyCub (higher apy’s), etc. Additionally - and this would be a “fallback” in the scenario that POLYCUB did something on the order of 10-20x and held for a significant period of time (also doing it so quickly that bridge revenue doesn’t keep pace) - the PoL holds a signicant amount of POLYCUB which means it’s reserves would increase in value right alongside the vexPOLYCUB vault. The second fallback behind that could be a reduction in the 20% fixed APR and can be put to a DAO vote at any time. I doubt these 2 fallbacks will be necessary, but it is good to know that they are both in place and at the ready
2). Also not an issue at current prices - in the scenario you described of POLYCUB going up significantly, say 10-20x: this would also increase the yield APY on all vaults as they are paid in POLYCUB
Price going up will tend to fix things and just lead to more revenue. The importance of your qesurions is extremely high though which is why we’ve allowed PoL to compound exponentially and gain a large stake in POLYCUB itself.
In the scenario of price going down, obviously PoL + MTB can support heavily. I think this creates a significantly strong floor price for POLYCUB. The price going up and leading to scalability issues is the concern which is why the reserves need to be large and revenue on the MTB needs to be continuously increased and focused upon
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Well, I don't know the exact figures of how much POL+MTB is earning each month. But the second scenario doesn't need POLYCUB to go 10-20x. It could just edge that point of only being able to pay the 20% APR. If this continued for a few months I could see it affecting the farm yields negatively.
The probability of it happening is low, but still, I think it is something to be considered and have an action plan against.
Thanks for your time!
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At current prices, the max that could go in is the max of the current TVL of xPOLYCUB. If we have a 100% staking rate, then that’s $800k staked in vexPOLY that needs 20% yield.
Current rates are well surpassing these figures. We do really need to release a report on PoL and MTB earnings. I think people will be blown away once we do.
Was waiting for these specific mechanics / UIs to be released. We should have our first monthly report out soon™️
As always, I appreciate the questions and agree with you - we always need to think of these scenarios and have good plans set out proactively 🦁
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