coveYFI Light

coveYFI is Cove’s liquid locker for YFI. YFI deposited into Cove is perpetually locked for veYFI, thus increasing the protocol’s ownership of veYFI and Yearn gauge voting power.

coveYFI Explainer

How coveYFI works

coveYFI stakers receive yield from:

  • 95% of early exit rewards
  • 95% of boost forfeit rewards
  • 5% performance fee on harvests
  • $COVE liquidity mining

What is a Liquid Locker?

A Liquid Locker is an innovative financial instrument embodied in a smart contract designed for the decentralized finance (DeFi) ecosystem. It enables participants to obtain and trade liquid tokens—such as coveYFI in this context—that represent ownership of locked governance tokens, specifically veYFI, without directly locking their YFI tokens.

Key Features and Benefits

  • Liquidity Preservation: Unlike traditional staking mechanisms where locking governance tokens reduces market liquidity, Liquid Lockers allow users to maintain liquidity. Participants can trade their coveYFI tokens, allowing users to exit positions if desired.
  • Enhanced Accessibility to Protocol Incentives: Users benefit from protocol emissions and other incentives associated with holding governance tokens (veYFI) without the need to lock their assets for extended periods. This system democratizes access to yield-generating opportunities within the protocol, such as those offered by Yearn.
  • Risk Mitigation: By facilitating the trade of coveYFI, users can mitigate the risk associated with the volatility of the underlying YFI tokens. They gain the flexibility to enter and exit positions according to market conditions, without being tied to lock-up periods typically required to participate in governance or to earn protocol emissions.

This mechanism ensures that while the governance tokens are locked and contributing to the protocol’s security and decision-making processes, users retain the flexibility and liquidity.

coveYFI/YFI Curve Pool

A coveYFI/YFI Curve pool has been created here.

Liquidity will be incentivized in future epochs.