Architecting the Future of Crypto
One Token for Risk Management and Flexible Yield
Crypto’s potential is massive, but managing deposits can quickly turn into a headache. Most protocols today offer automated strategies but leave users juggling multiple tokens, each representing a different yield source with unique exchange rates and risk profiles. From a more traditional standpoint, it's like having your investments spread across dozens of bank accounts, each with its own currency and interest rate… tracking performance or managing risk in real time is nearly impossible.
But LYS Protocol is not just about yield, there's so much more. We want to simplify the whole process by consolidating everything under one token, whyETH. With whyETH, users gain a single point of control and tracking, no matter how many strategies or vaults they’re using. And, we can’t forget about the risk management and AI elements that are baked into LYS Protocol to help guide you along your journey.
What is whyETH?
Essentially, whyETH is an ERC-1410 Partially Fungible Token (PFT) with added functionality from ERC-4626, which is a widely adopted tokenized vault standard. This combination enables whyETH to do more than just hold a balance, it acts like a deposit tracker.
Here’s how it works:
- Unified Balance Across Vaults
When a user deposits ETH (or ETH-like assets) into different LYS vaults (each tied to a distinct yield-generating strategy), they receive whyETH tokens that represent their shares in each vault. Rather than receiving multiple tokens (one for each vault), whyETH aggregates these holdings into one token, with each vault’s portion managed as a partition within whyETH.
- Dynamic Value Calculation
Each partition in whyETH corresponds to a specific vault, enabling it to show users their total holdings as an ETH-equivalent value. This calculation dynamically adjusts to reflect each vault's performance, so users get an up-to-date view of their total position without needing to track each vault individually.
- Flexible Transfer and Withdrawal
The structure of whyETH enables configurable transfer and withdrawal strategies. For example, users can choose to transfer their holdings proportionally across vaults or focus on specific vaults based on risk profiles. Withdrawals can also be flexible, with funds sourced from reserves, other vaults, or even collateralized if needed.
- Secondary Market Potential
Partial fungibility means whyETH can be traded or used in secondary markets, where they can offer custom exposure profiles, such as risk-weighted pools or yield-optimized portfolios, based on the makeup of the underlying vaults.
whyETH isn’t just another token, it’s the connective tissue of the LYS Protocol that brings yield generation and risk management into one unified asset. Imagine holding a single token that represents an entire portfolio of your deposits, each with distinct strategies and returns. That’s whyETH.
How does whyETH actually represent your entire position? The key lies in the way balances are calculated. LYS aggregates the value of each vault a user holds, taking into account different exchange rates between vaults. As vaults accrue yield or fluctuate in value, whyETH dynamically recalculates the user’s balance, showing an ETH-equivalent figure that represents the entire portfolio. This gives users a precise and transparent view of their holdings, eliminating the need for manual tracking of changing exchange rates across different vaults.
Why Combine ERC-4626 and ERC-1410?
To make all of this possible, LYS combines two powerful standards, ERC-4626 and ERC-1410. ERC-4626 is the most common tokenized vault standard, making each yield source easy to manage and integrate. Every vault in LYS follows this standard, ensuring easy operation with any compatible protocol. By adhering to ERC-4626, LYS ensures that vault interactions are efficient and interoperable, supporting integration with external crypto strategies.
But what really sets LYS apart is the use of ERC-1410. As mentioned above, each vault is organized into what ERC-1410 calls partitions (think of these as sub-balances within whyETH, each representing a different yield source). This enables whyETH to track multiple positions simultaneously, giving users a consolidated view of their deposits. By using partitions, whyETH enables users to manage a diversified portfolio within a single token while still allowing each vault to track its own specific value and risk profile.
Customizable Transfer Strategies
With whyETH, we’ve designed transfers to incorporate custom logic, creating a versatile and powerful structure for user interactions. Each transfer can be customized, enabling unique incentive mechanisms and secondary market behaviors, even within the same token. Under ERC-1410’s partitioned model, each vault is essentially a sub-balance within whyETH, representing distinct yield sources. This means that your investments across different strategies are aggregated under one token, but each part still tracks its specific performance and risk profile.
Doing this enables dynamic strategies that users can configure based on their needs. For example, you might set up proportional transfers across vaults, keeping your overall allocation balanced, or filter transfers based on vault risk level, letting you choose where your capital flows. Each transfer strategy can also respond to various scenarios… for instance, pausing transfers from specific vaults during protocol upgrades or re-routing around certain vaults based on real-time factors.
Our approach here simplifies overall management. whyETH’s abstraction layer combines all of this complexity into a single, user-friendly token. It’s built to offer flexibility and precision in managing multiple vaults without requiring users to handle each token individually. So whether you’re optimizing for growth, hedging for stability, or integrating whyETH into a secondary market, this adaptive transfer system supports a simple and customizable experience.
Managing Risk
When you deposit ETH (or ETH-like assets) into LYS Protocol, you're effectively creating a custom portfolio within whyETH, designed to match your unique risk and yield preferences. The way you allocate funds across various vaults directly shapes your risk and yield exposure, enabling you to fine-tune your portfolio over time.
Each vault operates independently, so risks are isolated, any issues in one vault won’t impact your other deposits. Additionally, LYS Protocol includes an emergency pause feature for added security. In cases of detected vulnerabilities or unexpected protocol behavior, the emergency pause can halt activity in specific vaults, protecting your assets and containing risk. This means whyETH can hold a diverse set of yield strategies and vaults under one token, giving you the flexibility to target high returns, low risk, or a balanced mix that aligns with your goals.
Why LYS Is a Game Changer
LYS Protocol isn’t just another yield token, it’s a complete system designed for maximum simplicity, safety, and intelligence in crypto. whyETH lets you consolidate your crypto activities under one token, removing the clutter of managing separate yield sources. With built-in modular transfer and withdrawal strategies, whyETH adapts to meet your specific needs, whether it’s maximizing returns, managing risk, or maintaining a balanced portfolio across various strategies.
By combining ERC-4626 for vault management with ERC-1410’s partially fungible model, LYS introduces the next wave of innovation, perfect for everyone from individual users to institutions aiming to optimize their crypto strategies.