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Withdrawal Process and Race Conditions

When your users withdraw their derivatives, they use a stableswap liqudity pool with a dynamic peg, that heals itself over time.

The process simply rewards the ones that helps healing the price, while punishing the ones that harms it.
It can be summarized as:
  1. 1.
    User withdraws funds.
    1. 1.
      If your pool has funds waiting to be staked within Portal, no slippage is applied in this process.
    2. 2.
      If Your Pool doesn't have enough funds, withdrawal is routed through DWP.
      1. 1.
        This creates "debt" that will be paid to the DWP as more validators are exited.
  2. 2.
    Depending on the withdrawn amount, a low slippage is applied, which increases as your token depegs further.
    1. 1.
      This creates a race condition between your users to penalize further depeg.
  3. 3.
    The market price of your derivative decreases.
    1. 1.
      New deposits will be routed for the absolute balance between supply and demand.
    2. 2.
      This creates a race condition between arbitragers to heal the price, as they will capture a boost when the derivative repegs.
  4. 4.
    If there are not enough validators that will be exited soon, Maintainer increases "withdrawalBoost" to incentivise early exit of the validators.
    1. 1.
      In the next step an arbitrage opportunity will occur, withdrawalBoost is the percentage of this opportunity to be shared with the validators.
    2. 2.
      When this parameter is increased, Operators will rush into exiting their validators to capture as much boost as possible, as the earliest exit will get more arbitrage.
      1. 1.
        Creates a race condition between Operators.
  5. 5.
    The validators are exited to heal the market price of your derivative.
    1. 1.
      The percentage of the arbitrage is given to the Operator, remaning funds are distributed to the Token holders with an increase on the underlying price.
      1. 1.
        Incentivises your stakers to hold your derivative in case of a depeg.