Geode Finance

Protect the Peg!

Rationale and Benefits behind DWPs

StableSwap algorithms are cool, but Staking Derivatives are not bound to result in a price ratio of "1". In fact, this ratio is expected to keep increasing over time thanks to staking rewards.

Better Derivative Health and Staking Price

With the mechanism of finalizing the withdrawal happening in buyback&burn, Liquidity Pool defines the health of a staking pool.

Geode Portal routes users to the Dynamic Withdraw Pool instead of minting new tokens if there is a better price, resulted by depeg event. Thus making sure that the market is healing itself while providing a better price to stakers.

Instant Withdrawals

Thanks to Liquidity Providers, stakers are able to realize their withdrawal without any waiting period.

Continuous Liquidity

When Telescope updates the price of a given derivative (there are many different IDs), the pricing algorithm changes to fulfill the new price. That means, any withdrawal request will result within an accurate price range.

Boosted Incentives

One additional benefit of DWP is to mathematically incentivize g-derivatives such as gETH holders to hold onto their staking derivative in the result of a depeg event.

When a depeg happens, a Staking Pool's Node Operators are expected to buyback&burn the staking derivative, to repeg the pool.
This creates an arbitrage, captured by the staking pool itself.
As the tokens are burned, the arbitrage yield is distributed to the current token holders automatically at the next Oracle update!

Withdrawal Boost (Ethereum)

In case of a depeg, it might not be enough to only prevent further withdrawals with increasing slippage and rewards, unstaking some validators might be necessary.
We mentioned that Planets can choose a percentage of these Boosted Incentives to be routed to their Node Operators, incentivising them to unstake some tokens to pay the debt of the DWP. Thus, even though every validator is created with a deadline, it is possible to bribe Operators to unstake some of their allocation.

Boosted Peg Protection (Avalanche)

If there is a severe depeg event, resulting in a negative pricing on the DWP, the Pool maintainers cannot get their fees until it is resolved.

Asset Security

It is much safer to have a dynamic peg in place with staking derivatives than any other asset pair. This is because Geode Portal has limitations in place for Oracle manipulations.