Alignment Plugins for Protocols

Alignment plugins enable protocols to create their own yield-stripping mechanisms using stAVAX infrastructure. By creating a custom plugin, protocols can capture and redirect AVAX staking yield for strategic growth, while offering unique incentives to their depositors.

How Alignment Plugins Work

The mechanism is straightforward:

1

User Deposit AVAX

User deposits AVAX into your protocol's custom Alignment Plugin contract and receives a custom receipt token (e.g., xyzAVAX).

2

Yield Generation

The plugin automatically routes the deposited AVAX to the stAVAX vault, where it begins generating yield.

3

Yield Harvest

The protocol programmatically harvests the generated yield while ensuring the user's original principal deposit remains untouched.

4

Yield Redirection

The protocol then programmatically directs this harvested yield to its chosen onchain destination, such as a treasury, a liquidity pool, or a rewards contract.

5

User Incentives

In exchange for providing the yield, users receive the protocol's unique rewards (e.g., its native token, airdrop points, or other perks).

6

Withdrawal

Users can withdraw their original AVAX principal, subject to any custom rules (like lockups) the protocol defines in its plugin.

Each plugin can issue its own custom receipt token (e.g., xyzAVAX) and operates independently with its own set of rules.

Key Benefits for Protocols

• Sustainable Funding: Access a continuous and external source of revenue from stAVAX yield without needing to sell your native token or rely on inflationary emissions.

• Immediate Access to Capital & Liquidity: Launch with committed capital by accepting user deposits into pre-launch vaults before a mainnet is live.

• Accelerated Growth: Use the captured yield to directly fund strategic actions that can rapidly bootstrap your protocol's most important metrics.

• Sustainable Incentives: Fund user rewards and liquidity programs with external yield earned from staked AVAX, providing a sustainable alternative to inflationary token emissions.

• User Alignment: Aligns depositors by offering them exposure to a protocol's success through rewards, while they retain their underlying AVAX principal.

Common Use Cases for Protocols

Alignment Plugins are flexible tools that can be adapted to achieve a variety of goals. Here are some common strategies:

• Bootstrap Liquidity: Redirect yield to DEX incentives to create sustainable liquidity for a protocol's token without diluting it through emissions.

• Raise Capital: Create a pre-deposit vault where users lock AVAX for a set period. Your protocol retains the generated yield to fund operations, and in return, users receive their principal back plus an allocation of your project's tokens.

• Monetize Bridge Flows: Monetize your bridge by routing bridged AVAX through a plugin, capturing the yield as protocol revenue while sending AVAX to the user on your chain.

• Incentivize Validators: Stream the captured yield directly to your validator set, making it more profitable and attractive to run a node and rapidly decentralizing your network.

Customization Options for Plugins

Protocols have full control over the key parameters of their plugin:

• Yield Distribution: You can specify the exact percentage of yield to be captured (from 0% to 100%) and programmatically define its onchain destination.

• Lockup Periods: Optional time-based or conditional locks on user deposits.

• Reward Structure: The design of the incentive system, using native tokens, points, revenue sharing, or other perks.

• Harvest Schedule: The frequency at which generated yield is collected and distributed.

Getting Started for Plugins

While the plugin contracts are open-source, launching an official Alignment Plugin is a collaborative process. We work with teams to ensure security, best practices, and successful integration into the broader Hypha ecosystem.

1

Review the Template

Examine the pstAVAX contract to understand the base yield-stripping mechanism. The generic, forkable version of this is called the lstAVAX open-source template.

2

Define a Strategy

Determine how the captured yield will be used and how depositors will be incentivized to participate.

3

Fork and Customize

Fork the lstAVAX template and modify the smart contract to implement the desired logic.

4

Deploy and Integrate

Deploy the custom plugin and integrate it with the protocol's existing infrastructure. Then, begin accepting user deposits to power your protocol's growth.

For technical support and integration assistance, please contact the team.