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  1. MultiversX
  2. Staking / Derivatives
  3. Introduction to Staking
  4. Derivative Tokens
  5. Redeemable Derivatives

S/JWLEGLD

Minting

JWLEGLD is a derivative token that can be minted using EGLD.

JWLEGLD can make use of POL by minting 1.1 JWLEGLD per deposited EGLD. This does not mean JWLEGLD is not 1:1 backed. JWLEGLD is 1:1 backed. Please read up on how POL works, what it does, and how the backing is ensured.

Staking

Staking JWLEGLD will give the user SJWLEGLD, which is appreciating in value against JWLEGLD every day after MultiversX epoch change.

The EGLD used to mint JWLEGLD are staked across multiple validators on MultiversX. The staked EGLD generate rewards during the day. The rewards are paid out at the end of each blockchain epoch. Therefore, the ratio between SJWLEGLD and JWLEGLD rises once a day, after the end of each epoch.

SJWLEGLD can be transferred between wallets too. This allows you to transfer your ownership to another wallet, without having to unstake your SJWLEGLD.

Gauge mechanism

Most of the primary tokens used to mint JWLEGLD (in accordance with POL) are being delegated to various whitelisted validators to earn rewards. The Gauge mechanism decides which validator gets more EGLD delegated towards him.

Staked JWLASH is eligible for voting on Gauge governance.

Rewards

Rewards for JWLEGLD staking stem from these sources:

  • EGLD used to mint JWLEGLD is staked at various staking providers on MultiversX to generate yield.

  • Any fees from the unbonding/redemption mechanism go towards SJWLEGLD as well.

Unstaking

Unstaking SJWLEGLD for JWLEGLD is possible instantly and at no fees.

Swapping

You can swap JWLEGLD at varying market rates on Ashswap.

Redemption/Unbonding - Unbonding NFT - Redemption Fees

JWLEGLD is redeemable in a 1:1 ratio for normal EGLD. The unbonding period for JWLEGLD is epochs (unbonding time). 10 epochs is usually 10 days on the MultiversX network. See Epochs.

When unbonding, you receive an NFT from JewelSwap. UJWLEGLD NFT This is a so-called unstaking/unbonding NFT. You can use this NFT to send it to a different wallet, trade it on NFT Marketplaces or take a loan against it. You need the NFT (which is essentially a receipt) to claim your assets after the unbonding time passed. The NFT proofs your ownership of the unbonding assets.

Most of the time, there are no fees associated with redeeming JWLEGLD. A dynamic fee mechanism may decide to start charging a small fee when redeeming JWLEGLD. This mechanism adds a redemption fee in case of high redemption requests.

This is to prevent bank-run scenarios, protect leveraged farms from forced closure, protect JWLEGLD LP liquidity, allow liquidity to be removed from POL if needed and also stabilize the SJWLEGLD APR. The intention of this mechanism is solely to protect users and the stability of the ecosystem.

All collected fees of this mechanism go to the stakers.

More Information on the JWLEGLD dynamic fees redemption mechanism

If many redemptions are happening at the same time or the volume of the redemptions is high, the ratio between existing stable tokens and staked stable tokens will quickly diminish. This in turn will make the APR of SJWLEGLD fall very quickly.

Furthermore, a high influx of redemption requests can lead to the forced closure of many leveraged yield farms, utilizing JWLEGLD.

Assuming JewelSwap has to force close a lot of leveraged farms that utilize JWLEGLD, the following might happen:

  • Lost assets due to swap fees and slippage when closing the farm

    • This impacts the farmer, since he did not want to close the farm and now it had to be closed and some of his profit was eaten by swap fees and slippage

  • Liquidity in the affected Liquidity Pool is now lower

    • Depending on how many leveraged positions had to be closed, liquidity could be impacted significantly

      • Which increases slippage when swapping and affects all other liquidity providers as well

  • Price changes may lead to liquidation

    • Because of the forced closure of some leveraged farms, other farmers that did not have their farm closed may see themselves closer to a point of liquidation

      • Or in the worst case, their farm has to be liquidated because of the forced-closure of the other farms

To prevent these scenarios, a dynamic fee may be put into place by the system to disincentivize mass-redemptions to protect stakers, farmers and prevent bank runs.

Fees

10% of the generated rewards from EGLD staking are kept by JewelSwap. 90% are going to SJWLEGLD.

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Last updated 7 months ago

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