Ensuring APY(Annual Percentage Yield) Sustainability

APY Explained

Annual Percentage Yield (APY) measures the effective annual rate of return on a principal token amount by incorporating the effects of compounding interest. Within the Eutopia ecosystem, Eutopia tokens represent the principal, with compound interest applied periodically during each Rebase event (every 15 minutes).

Mechanics of APY

• Principal Calculation: The new principal amount consists of the current Eutopia token balance plus the newly added rebase token amount.

• Rebase Rewards: This total principal is then utilized to compute the subsequent rebase rewards.

Exponential Growth with APY

APY facilitates exponential, rather than linear, growth of token balances over time. With a daily compound interest rate of 2.0181%, an initial balance of 1 EUTO on day 1 would grow to approximately 1,468.47 EUTO after one year, demonstrating the power of compound interest.

By leveraging APY within the Eutopia ecosystem, EUTO holders can achieve substantial, compounded growth in their token holdings over time.

Positive Scenario: Supporting Rewards

Eutopia has established a robust Elastic Supply Stability Reserve (ESSR) framework that leverages trading volume fees to fund staking rewards (rebase rewards) when the ETH/EUTO pair supply reaches 2.5% of the total supply. When daily ESSR gains meet or exceed the total Holders' Daily ROI, the Swap Threshold can accommodate the additional value generated from the Rebase Rewards.

Negative Scenario: Utilizing Treasury Support

In scenarios where daily ESSR gains are insufficient to cover the Holders' Daily ROI, a portion of the Treasury is allocated to compensate for the shortfall.

Self-equalizing mechanism creates a self-balancing system that ensures consistently high returns for all Eutopia token holders over time. By comprehending Eutopia's methodology for supporting its APY, EUTO holders can be assured of the sustainability and reliability of their staking rewards.