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Burn Sources Details

Alpaca revenue comes from multiple sources and is collected under different smart contracts. We discuss below, in detail, the method by which each revenue source is collected and how they are used for buyback & burn.

Regular Income Streams

Lending Performance Fees

  • Lending performance fees accrue in each lending vault based on the actual borrowing interest incurred.
  • Based on the actual borrowing interest accrued, the smart contract keeps track of the amount owed to the protocol - which is currently set at 19%. Refer to the Global Parameter page for all the most up-to-date parameters value.
  • The accrued fees are withdrawn once a week from the vaults. Each week, we queue the transactions (one for each lending vault) to make withdrawals on Saturday, which then have to go through the 24-hour timelock.
  • The withdrawals are executed on Sunday whereby 10% of the 19% are used for buyback & burn.
  • Withdrawal transactions are initiated from the deployer address. But since they are made right before the buyback&burn, the funds are not kept in any wallet for a long period of time.
  • The buyback transaction hashes are published each week in a detailed spreadsheet.
  • This portion of the revenue is a regular income. Hence, the entire amount will be used for buyback&burn each week
In order to check how much fees have accrued in each vault, you can do the following:
  • Go to BscScan and enter the vault contract address
  • Go to “Contract” tab then “Read as Proxy
  • Go to “reservePool
  • The value is denominated in wei, so you must divide by 1E18 to read the value in the normal unit.
Note: Please note that these are the accrued fees that have NOT been withdrawn. Thus, if you check them right after the weekly withdrawals (e.g., Monday morning), they will have a low value.
Lending Vault Contract Addresses: BNB Chain:
Fantom:

AUSD Stability Fees

  • Stability fees accrue in AUSD, which the smart contract keeps track of the amount owed.
  • Refer to the Global Parameter page for all the most up-to-date parameters value.
  • The accrued fees are withdrawn once a week from the vaults. Each week, we queue the transactions (one for each lending vault) to make withdrawals on Saturday, which then have to go through the 24-hour timelock.
  • The withdrawals are executed on Sunday whereby 50% of the fees are used for buyback & burn.
  • Withdrawal transactions are initiated from the deployer address. But since they are made right before the buyback & burn, the funds are not kept in any wallet for a long period of time.
  • The buyback transaction hashes are published each week in a detailed spreadsheet.
  • This portion of the revenue is a regular income. Hence, they will use the entire amount for buyback & burn each week
AUSD stability fees accrue in 0xc44f82b07ab3e691f826951a6e335e1bc1bb0b51 wallet.
In order to check the withdrawals transactions records, you can do the followings:
  • Go to BscScan at this contract (StablecoinAdapter)
  • Check the “Withdraw” transactions performed by Alpaca Finance: Deployer
  • For example, this transaction is the withdrawal of the Stability Fee of 984 AUSD.

Automated Vault’s Management Fees

  • Management fees accrue in each AV in the form of the vault’s share tokens.
  • The share tokens are minted to management fee’s treasury wallets every time there is a deposit, withdrawal, or rebalance transaction.
  • We perform withdrawals of share tokens from the vaults once every two weeks to save on gas and swap fees, whereby 50% are used for buyback&burn.
  • Withdrawal transactions are initiated from the deployer address. But since they are made right before the buyback&burn, the funds are not kept in any wallet for a long period of time.
  • The buyback transaction hashes are published each week in a detailed spreadsheet.
  • This portion of the revenue is a regular income. Hence, they will use the entire amount for buyback&burn each week.
You can check the accrued fees by the following steps:
  • Go to BscScan and enter the vault contract address
Note: Vault contract address can be found by going to each AV info page.
  • Go to “Contract” then “Read as Proxy
  • Go to “pendingManagementFee
  • The value is denominated in wei, so you must divide by 1E18 to read the value in the normal unit.
Note: Please note that these are the accrued fees that have NOT been minted into share tokens. Thus, if you check them right after the weekly withdrawals (e.g., Monday morning), they will have a low value.
You can check the minted shares for management fees in this wallet: https://bscscan.com/address/0x7e2308437c2f4c8934214663dc8476037625a270

Irregular Income Streams

Our burn strategy is to distribute the burns on a weekly basis so as to maximize the number of deflationary weeks. Short-term market sentiment is highly correlated with overall market conditions, and in our experience, doing large burns over a week does not have nearly as much of an impact as guaranteeing steady deflation of the ALPACA week after week.
Irregular streams such as liquidation treasury and early governance withdrawal are burned gradually, if in surplus to emissions. The method by which we burn from irregular streams is the following. If burn from revenue is lower than the mint amount(which has been the case so far through Alpaca's existence), we withdraw from the irregular streams of ALPACA to be burned, such as liquidation treasury, so that the total amount of ALPACA burned that week(including the amount coming in from revenue) is up to slightly higher than the amount of tokens minted that week--to remain deflationary.
In the future, when burn from regular revenue will become higher than minted ALPACA, if there are remaining funds in the liquidation treasury, we will burn up to a certain amount per week from there, such as 100k-250k.

Alpies NFT Royalty

  • Alpies royalty fees are collected for secondary sales.
  • 2.5% (out of 5%) of secondary Alpies' sales go towards buyback & burn.
You can track the royalties collected in the Alpies’ deployer contract address:
(Please note that the royalties are in wBNB and wETH respectively.)

Governance Vault’s Early Withdrawal Fees

  • Early withdrawal fee occurs when users make an early withdrawal from the Governance vault.
  • Since the fees are already in ALPACA, there is no buyback associated with this stream of protocol revenue.
  • 50% of the early withdrawal fees goes toward burn while the remaining half goes towards the remaining Governance vault stakers.
The burn portion of the early withdrawal fees is stored in: 0x2bfdacF6CdBC3ECcb95E68ec448ECf3d0693F732
You can also check all the associated early withdrawal transactions by:

Liquidation Fees

  • Liquidation fee is not a regular income stream and only occurs when LYF positions are liquidated.
Liquidation fees wallet address is: 0x0FfA891ab6f410bbd7403b709e7d38D7a812125B

Automated Vault’s Withdrawal Fees

  • AV’s early withdrawal fee is not a regular income stream and only occurs when a user makes a withdrawal from Automated Vaults. It’s collected in the vault’s share tokens.
You can check the AV’s withdrawal fees in this wallet: https://bscscan.com/address/0x417d3e491cbaad07b2433781e50bc6cd09641bc0