Yel Finance
  • Introduction
    • Exploring Yel Finance
    • Yel On-Boarding
  • Key Concepts
    • Arbitrage & LP Roots
    • Volatility Farming
  • Products
    • Potions
      • Simplified Explanation of Potions
      • Interactions with Potions
      • Fee Structure
      • Maths Behind Potions
      • Engagement Strategies
    • Utility Products
  • Step-by-Step Instructions
    • Wrap & UnWrap
    • Liquidity Provision
    • Swap
    • How to Manually Arbitrage
  • About Yel Finance
    • Yel R&D Lab
    • Roadmap
    • Tokenomics
    • Governance
    • Oracles
  • References
    • Publications
    • Yel Finance Links
    • Yel Team Socials
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  1. Products

Potions

Potions are a key component of the closed volatility farming ecosystem, enabling users to benefit from market fluctuations and generate yield through creating derivatives, providing liquidity and/or executing arbitrager opportunities. Potions leverage parallel liquidity model to create a closed ecosystem for democratized arbitrage.

How Potions work:

  1. Creating Derivatives: Original assets (e.g., YEL) are wrapped into derivative tokens (e.g., lYEL) through the Potions ecosystem.

  2. Parallel Liquidity Pools: A secondary liquidity pool is created with the derivative token (e.g., lYEL/USDT), existing alongside the original liquidity pool (e.g., YEL/USDT).

  3. Price Variances: Since derivative and original assets are not directly tied, price discrepancies naturally occur between these pools, creating arbitrage opportunities.

Key Benefits of Potions:

  • Yield Generation: Users collect competitive yield by holding derivative tokens or providing liquidity;

  • Arbitrage Opportunities: Structured price variances between pools allow users to capitalize on market fluctuations;

  • Sustainability: The system ensures a balanced ecosystem by incentivizing all participant roles through rewards and fees;

  • User Flexibility: Options for simple or advanced strategies cater to both beginner and experienced users.

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Last updated 5 months ago

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