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Burn Vaults

πŸ”₯ Burn Vaults

Burn vaults are a special kind of vault. They are used to manage the burn rate of fees, and have their own distinct benefits.
Instead of immediately burning all fees, we opt for a slow burn, gradually growing over time.

Here's how it normally works: ☝

Say we have $10,000 in fees to burn. Most other yield farms would just take a portion ($1,000 for example), to buy back their own token and send it to a burn address.
This ends up with $9,000 leftover in fees and a bump in the token price temporarily.
Eventually, there won't be any more fees to burn. The price of the token will gradually trickle down to zero, as there is now no price incentive to farm.

What do we do differently?

Instead of the above, our methodology is to take the burning fees and stake them in a vault, for example 1ETH-1UST. We then burn the earnings from the vault.
Going back to our $10,000 example above:
That $10,000 is staked in a vault, generating a humble but consistent $30 per day. The key here is consistency: it will continuously generate $30 per day.
As deposits increase and other vaults harvest rewards, the burn vault grows, generating more rewards to burn!
This avoids the price gradually reducing to nothing, making FarmersOnly farming sustainable for the long-haul!
Last modified 4mo ago