The YieldSync plugin developed by SwapX and Algebra Labs is designed to address the challenges associated with managing liquidity pools containing Liquid Staking Tokens (LSTs), Liquid Restaking Tokens (LRTs), and yield-bearing tokens within decentralized exchanges.
YieldSync aims to optimize the management of liquidity in pools with low swap fee yields by synchronizing these yields with the voting incentives of the ve(3,3) system. This reduces the gap between the rewards given via emissions and the actual swap fees earned, thereby increasing efficiency.
YieldSync creates a cycle where redistributed yield becomes voting incentives, boosting pool interest, votes, emissions, and APR. This attracts more liquidity, generating more yield to redistribute. For example, with wstETH (Lido.fi, 2.9% yield) and wrsETH (KelpDAO, 3.9% yield), over 30 days, the combined yield is $21,752. With a 50% resync, this adds $10,876 to voting incentives, increasing total incentives from $1,917 in swap fees to $12,793, a 567% efficiency boost, attracting more liquidity and benefiting providers.
