Soy Finance - Liquidity Pools Classification

As a DEX, Soy Finance relies on liquidity providers. Users provide their funds to ensure the platform's liquidity and receive an income on their deposit as a reward.

Liquidity providers, therefore, play a crucial role in the ecosystem. Ensuring an appropriate level of revenue for the liquidity providers and the consistency of liquidity/ profitability across all liquidity pools is essential to ultimately ensure the smooth functioning of the Soy Finance platform over the long term.

Liquidity Requirements

While the community defines the farm’s multiplier during the listing process, it can happen that the liquidity of a farm is inadequate and thus may be detrimental to the ecosystem. To prevent this situation, we are introducing a farm classification; Farms are distinguished into classes based on their liquidity compared to the total liquidity in SOY DeFi, so as to ensure a fair distribution of the SOY token rewards among the different farms.

Six classes of farms are distinguished, their multipliers being defined according to a minimum liquidity threshold. The table below shows the minimum amount of liquidity required to maintain the class of a farm.

Minimum Liquidity Requirement Per Class

Beginning from May 1st 2022, farms that do not meet the liquidity requirements for a period of 30 days will be downgraded to the next lower class.

Note: The downgrading of a farm is irreversible and can only be reinstated by the vote of the community.

Algorithmic-based Farming Multiplier Adjustment

As mentioned in our roadmap, we are currently developing an algorithm for adjusting the farms' multiplier. This mechanism will ensure Soy Finance's users the best efficiency and profitability and the process described in this article can be seen as the first step toward a fully automated-algorithmic-based solution.

Note: The minimum liquidity thresholds will be recalculated each month based on the average price of the tokens for the previous 30 days. The thresholds are therefore subject to change over time.