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Protocol Earnings

Cypher is built so fees flow back to LPs, xCYPH stakers, and the ecosystem — not into a black box.
All earnings stay on Ethereum and are distributed on-chain.

AMM V2 — Fee Split​

The V2 engine is straightforward:

  • 70% → Liquidity Providers
  • 25% → xCYPH stakers
  • 5% → Operational Treasury (opex)

LPs earn strong base APR from trading volume, while xCYPH holders capture real yield from protocol activity.

AMM V4 — Dynamic Fee Model​

V4 introduces a dynamic AI algorithm that adjusts pool fees in real time.
The goal is simple: keep Cypher ultra-competitive on major pools while pushing more real yield to xCYPH holders everywhere else.

Default split at pool creation​

  • 85% → Liquidity Providers
  • 10.5% → xCYPH
  • 3% → opex
  • 1.5% → Algebra

This is the baseline - the starting point for every V4 pair.

How the dynamic algorithm works​

Each pool is scored using on-chain data:

  • liquidity depth and routing competitiveness
  • trading volume and fee generation
  • partner incentives or scheduled emissions
  • how much of the pool Cypher controls

Based on these signals, the algorithm tunes the LP vs protocol share within strict boundaries:

  • LP share range: 60% → 90%
  • Protocol share (10% → 40%) is always split:
    • 70% → xCYPH
    • 20% → opex
    • 10% → Algebra

When a pool’s LP share is lowered, it receives extra oCYPH emissions, which keeps LP APR high.
So instead of “cutting” LPs, Cypher rebalances where yield comes from.

  • Deep blue-chip pools → higher LP share
  • Incentivized or partner pools → higher xCYPH capture + LPs compensated with emissions

Everything is on-chain, rule-based, and transparent.

Examples​

ETH-USDC

  • Deep liquidity, highly competitive
  • Goal: win routing, maximize organic volume
    ➡ LP share ~85–90%
    ➡ Deep TVL + strong LP APR

CULT-ETH

  • Strong volume, partner emissions
  • LPs already rewarded externally
    ➡ LP share ~60–70%
    ➡ More fees flow to xCYPH
    ➡ Pool gets extra oCYPH so LPs stay competitive

Why V4 matters​

Most AMMs use a fixed fee split for every pair.
Cypher doesn’t.

V4 adjusts to market conditions, keeps key pools competitive, and channels more real yield back to xCYPH stakers — without ever disadvantaging LPs.

It’s a model built to grow liquidity, reward stakers, and keep value on Ethereum.

Protocol Buybacks​

Fees earned from all of the protocol features are used to buy back $CYPH from the open market and then distribute it via staking to xCYPH holders.

Revenue generation

  • Trading fees from the AMM
  • Capital formation platform
  • Token factory
  • oCYPH redemptions

The growth of the Cypher protocol is therefore directly aligned with the value of the CYPH token, and more importantly, the value that long-term holders are capturing via xCYPH staking.

To further strengthen alignment, oCYPH ensures farmers do not harm the health of the protocol, with oCYPH > CYPH redemptions leading to buybacks and increased staking yields:

  • oCYPH Conversion Fee:
    When users convert oCYPH into liquid CYPH, a percentage of the converted value must be paid in ETH.

  • ETH Utilization:
    The ETH collected from these conversions is used to buy back CYPH directly from the open market.

  • Buyback Impact:
    All purchased tokens from the buybacks are subsequently distributed to xCYPH stakers.