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  1. User Guide
  2. Liquidity Pools - Earn Yield Passively

Withdrawing as an LP

Liquidity providers can initiate a withdrawal any time. Withdrawals will be processed via a first-in-first-out queue, subject to availability of free collateral and the withdrawal cooldown period. Currently the withdrawal cooldown period is set to 3 days. This cooldown period ensures thats malicious actors can't game the pool greeks and thus the options prices by depositing/withdrawing rapidly.

The amount of tokens receivable will be in a mixture of underlying and/or stable assets that results in the normalized delta of the pool being closer to the target delta.

The formula below details the withdrawal formula, when there exists a ratio of assets that will achieve the target delta. The protocol solves for uwu_{w}uw​ and sws_wsw​, that is equivalent in dollar value to the LP tokens withdrawn.

Dt=Dc−uwNAV−uw−sw/pwhereDt=Target DeltaDc=Cummulative DeltaNAV=Net Asset Value in Underlyinguw=Underlying to withdraw (before fees)sw=Stable to withdraw (before fees)p=Underlying PriceD_{t} = \frac{D_{c} - u_{w}}{NAV - u_{w} - s_{w} / p} \\ where \\D_{t} = Target\ Delta \\D_{c} = Cummulative\ Delta \\NAV = Net\ Asset\ Value\ in\ Underlying \\u_{w} = Underlying\ to\ withdraw\ (before\ fees) \\s_{w} = Stable\ to\ withdraw\ (before\ fees) \\p = Underlying \ PriceDt​=NAV−uw​−sw​/pDc​−uw​​whereDt​=Target DeltaDc​=Cummulative DeltaNAV=Net Asset Value in Underlyinguw​=Underlying to withdraw (before fees)sw​=Stable to withdraw (before fees)p=Underlying Price

Withdrawal fees are then subtracted from the assets withdrawn and redistributed fully back to the remaining liquidity providers.

Withdrawal Fee

The protocol imposes a small 0.2% withdrawal fee for LPs to provide an economic dissentive for users to game the Pool Greeks via deposits. Given sufficient duration of liquidity provisioning, this fee should be negligible.

Last updated 1 year ago

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