Liquidity
Provide liquidity to earn 80% of protocol revenue.
Pool
LPBASE consists of many pools, and the LP token of each pool consists of an index of assets used for swap and leverage trading.
5Pool is the most core pool, composed of five tokens: wBTC, ETH, USDC, USDT, and DAI. 5LP, the LP token of 5Pool, will also be the most important asset in the entire ecosystem:
To form new pools with other tokens, such as forming LSD Pool with stETH and rETH, or forming DeFi Pool with PENDLE and LDO, etc.
Acting as collateral when shorting assets of other pools.
Serving as a bridging asset for swaps.
Each pool is exposed directionally to its underlying assets as well as acting as the counterparty to traders on the platform. If the prices of underlying assets are increasing, then the price of LP token will increase as well. Meanwhile, LP holders will make a profit when leverage traders suffer losses and vice versa.
Minting/Burning LP
LP token can be minted by any asset and burnt to redeem any asset in the associated pool.
LP Price = （Total USD value of assets in the pool + unrealized PnL) / (LP token supply)
The fees to mint or burn LP will vary from 0.2% to 0.8% based on whether the action improves or reduces the balance of assets in the pool. The fee decreases when the action brings the actual weight closer to the target weight and vice versa. Token weights are adjusted to help hedge LP holders based on the open positions of traders. Users can choose the token used by minting/burning LP according to the real-time fee rate.
Stake
LP can be staked into the associated pool and receive 20% of protocol revenue as rewards.
You can stake or unstake at any time. After staking, you will receive an sLP token which is the proof of staking, used to calculate the reward of staking, and cannot be transferred.
For details of staking rewards, please read the section Staking below.
Rewards
There are two kinds of rewards for LPs: "Compound" and "Staking".
Compound
60% of protocol fees generated from a pool are automatically compounded into the LP token of the pool, which increases the value of each LP token without increasing the total amount of LP tokens.
The compound rewards of each pool are calculated separately.
e.g.
The net value of a given pool is $1,000,000 and the total amount of LP tokens for this pool is 100,000, then the price of LP token is $1,000,000/100,000=$10.
Assume that there is no asset price change and PNL change before compounding, and the compounded fee is $50,000.
Then the net value of the pool will be $1,050,000, while the total supply of LP tokens is still 100,000, the price of LP token will increase to $1,050,000/100,000=$10.5.
Staking
20% of protocol fees generated from each pool will be directed to LP stakers as rewards. The fees will be converted to LPs and distributed to LP stakers. You can "claim" or "compound" your rewards at any time.
Claim will transfer any unclaimed rewards to your wallet. Unstake LP will automatically claim any unclaimed rewards in the same transaction.
Compound will stake your unclaimed rewards to the pool.
Staking rewards are compensation for LPs when leverage traders make a profit. The leverage traders' PnL is checked daily to determine whether to issue rewards. If traders win on the previous day, the rewards will be issued; otherwise, the rewards will be accumulated until the next time. If the reward can cover the loss of LPs, the amount of reward issued will be the loss of LPs; otherwise, all accumulated rewards will be issued.
Except for 5Pool, the staking rewards of each pool are calculated separately. Since 5LP exists in multiple pools, the 20% fee from 5Pool (the basic pool) will partially enter into other pools as staking rewards. The ratio will be adjusted in time according to the amount of 5LP in each pool.
e.g.
Assumption：
There are 3 pools: 5Pool, LSD Pool, and DeFi Pool.
The total fee from 5Pool is $500, so the part for staking rewards is $500*20%=$100.
The ratio of the 3 pools are 60%(5Pool), 25%(LSD Pool), 15%(DeFi Pool).
Then the rewards for each pool will be：
5Pool: $100*60%=$60
LSD Pool: $100*25%=$25 & 20% fee from LSD Pool
DeFi Pool: $100*15%=$15 & 20% fee from DeFi Pool
sLP Points
sLP points are used to calculate staking rewards based on the amount of LP tokens staked and the duration of the staking period. From the moment you stake, points begin to accrue. The longer you stake, the more points you will get. However, there is a limit value for the points of each staked LP, and it usually takes about 2 weeks to accumulate from 0 to the limit value. When you unstake, a corresponding proportion of points will be deducted from your total points.
For each pool, your rewards = (pool rewards) * (your sLP points) / (total sLP points).
e.g.
The total reward for the pool is $1,000. Your sLP points are 100, and the total sLP points are 2,000, then your rewards will be $1000* 100/2000=$50.
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