Depositing as an LP

Depositing as an LP

A liquidity provider can supply USDC or the underlying token in any ratio, which would be converted upon processing to a mixture of assets that meets the target delta of the pool. The liquidity provider will receive an equivalent amount of LP tokens that will appreciate in value as the pool earn from fees.

Depositing into an LP essentially can be treated as opening a yield generating position that is 50% the underlying asset and 50% USDC. For example, Alice has 5 SOL ($10 per SOL) that she wants to deposit into an LP, but she does not have any USDC, so she deposits 5 SOL. That value is converted into equivalent LP tokens, which roughly represent a portfolio that is 2.5 SOL and $25 USDC. The exact ratio will change based on the trades in the pool, but the target is always at a delta of 0.5, meaning the pool will be balanced at 50% - 50% asset value.

Swapping Formula

The formula below details the swapping formula, when there exists a ratio of deposits that will achieve the target delta. The protocol solves for $u_{post}$ and $s_{post}$, such that the new normalized delta of the pool is at the target delta.

$$D_{t} = \frac{D_{c} + u_{post}}{NAV + u_{post} + s_{post} / p} \\ where \\D_{t} = Target\ Delta \\D_{c} = Cummulative\ Delta \\NAV = Net\ Asset\ Value\ in\ Underlying \\u_{post} = Net\ underlying\ added\ after\ conversion \\s_{post} = Net\ stable\ added\ after\ conversion \\p = Underlying \ Price$$

If there are no ratio of deposits that will achieve the target delta, it means that the pool is currently overweighted in one direction (either stable or underlying), and thus a full conversion of all stable to underlying (or vice versa) for the deposit is needed.

A 0.50% (mSOL) / 1% (tBTC) slippage fee on the converted assets is paid to a permissionless keeper that is responsible for performing the physical swap.

Generally deposits are processed within 10 minutes, but may vary because all deposits are processed via a first-in-first-out queue, and are subjected to a deposit cooldown period and maximum pool capacity.