Inflation & Emission

YieldBasis uses sophisticated emission mechanics to ensure sustainable token distribution and prevent excessive inflation.

30% of all tokens (300M YB) are distributed through liquidity mining based on a dynamic emission schedule. These tokens are distributed to users who provide liquidity to different pools AND stake ybBTC, giving up trading fee yield in exchange for YB emissions based on gauge weights.

How Gauge-Based Distribution Works

The liquidity mining program uses a gauge voting system where veYB holders vote on which pools receive emissions. Gauges are smart contracts that measure provided liquidity and distribute rewards based on users' shares. The more votes a gauge receives, the more tokens it gets distributed to its liquidity providers.

Emission Formulas

Maximum daily emission rate:

$$E_{max} = \frac{\text{Tokens for LM left}}{4 \times 365}$$

Actual daily emissions:

$$E_{daily} = E_{max} \times \sqrt{s}$$

Where:

• Tokens for LM left: Remaining tokens available for liquidity mining
• 4 * 365 days: 4-year emission period (1,460 days total)
• $E_{max}$: Maximum daily emission rate
• $s$: Stake rate - the relative share of ybBTC that is staked to receive YB emissions (0 ≤ s ≤ 1)

Daily Emissions vs Staking Rate

Staking: 50%Daily Emission: 70.7%

How it works: As more ybBTC gets staked (stake_rate grows), daily emissions increase following the √s curve. This creates a natural balance where higher staking leads to higher emissions, but with diminishing returns.