Rebasing and AQTIS
As part of AQTIS' mission to build a self-sustaining ecosystem, we’ve developed several unique features that distinguish us from other projects in the space. One of these innovations is our hybrid approach to rebasing, integrated with our quant tech and yield management system. This combination allows us to provide consistent linear yield throughout the year.
In this document, we explain what rebasing is, how it works, and how AQTIS has leveraged it to create a secure and efficient system.
What is Rebasing?
Rebasing tokens are cryptocurrencies whose supply is algorithmically adjusted (through burning or minting) to maintain a specific value or target. In AQTIS, rebasing is used to ensure that yield is aligned with the rewards generated by our Liquid Staking Tokens (LSTs).
To ensure yield remains consistent, AQTIS rebases the relationship between the LST and its yield every 24 hours. This means that daily, the yield is credited into a Yield Smart Contract (YDSC), allowing it to accumulate for the token holders. When you choose to claim your yield, you receive it in ETH, USDC, or AQTIS tokens. While yield is held in the smart contract, it is stored as LSTs, offering a range of unique benefits, as we’ll explain below.
When users claim, the rebased tokens are sold into the liquidity pool, and AQTIS repurchases these tokens using the performance generated by our quant tech. This converts the LSTs back into their native assets, which are automatically distributed to holders through smart contracts.
Maintaining Consistency with Rebasing
To ensure consistent yield, AQTIS has built in several layers of security and efficiency:
The Ecosystem Liquidity Aggregator (ELA) optimizes liquidity utilization.
The Ecosystem Liquidity Insurance Fund (ELIF) acts as a backup pool for security and liquidity management.
These systems work together to support the quant tech, allowing it to continue executing trades without disruption. Other projects might use non-rebasing tokens that either increase the value of existing tokens or employ a dual-token model, but AQTIS’s rebased token model, enhanced with liquidity provisions, provides more efficiency and security.
Comparison of Yield Management Approaches
To make the advantages of AQTIS’s approach clearer, here’s a breakdown of the different yield management methods in DeFi:
Rebase-only: Offers consistent yield but requires users to convert rebased tokens into native assets.
Native assets: Tied directly to treasury management, leading to lower liquidity utilization and potential bottlenecks.
Dual-token model: Yields are delivered in native assets, but this model often introduces higher volatility.
AQTIS Hybrid Model: Uses rebasing on the back end, delivering consistent yield in native assets to users, reducing systemic risk, and ensuring frictionless yield claiming.
Impact on AQTIS LSTs
For AQTIS LST holders, rebasing occurs on the back end, so users experience a seamless process. However, this mechanism provides greater security and lower risk of exploits than alternative systems. By separating assets used in quant tech from the rewards system, we ensure consistent yield for the AQTIS community.
When tokens are rebased, they are automatically converted into native assets and distributed to users. If users opt to compound, they receive rewards in the form of more LSTs, increasing their holdings and thus their future yields.
How Liquidity and Rebasing Work Together
Rebasing tokens that are converted into native assets are repurchased by AQTIS using the yield generated through our Quant Tech. This setup allows users to enjoy daily rewards while AQTIS manages liquidity pools and maintains appropriate price ranges for individual LSTs.
Why Rebasing Matters
Without rebasing, yield can fluctuate unpredictably. For example, a 10% yield one month followed by a 5% yield the next would average out to 7.5%, but if there is a negative performance, we might not be able to cover the yield at all. Rebasing allows us to ensure a consistent, linear yield, smoothing out fluctuations.
The rebasing mechanism, combined with substantial liquidity in the LST liquidity pools, creates a crucial liquidity buffer between the yield and our Quant Tech. Even if the ELIF is initially empty, we have enough liquidity in the LP pool to handle slippage and manage pools actively. This setup ensures that even during a sudden surge in exit liquidity, we don’t need to close trading positions, which could negatively impact performance and cause delays for users.
In Summary
AQTIS employs a hybrid approach to rebasing, integrating several distinct features to ensure:
Consistent yield for LST token holders.
Reliable liquidity for users.
Enhanced security across the ecosystem.
By leveraging this combination of rebasing and liquidity management, AQTIS offers a more efficient, secure, and user-friendly ecosystem than other DeFi projects.
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