Synthetic Liquidity (WIP)
Utilizing this feature will require a Bound Liquidity Pool.
Synthetic Liquidity will allow less than 100% collateralization ratio to be introduced for a staking derivative.
However, Synthetic Liquidity is only created on deposits and burned on withdrawals.
This way, we can allow a continuous liquidity flow to bound liquidity pool, without creating any issues on the supply model.
Staking Pool Owners can set a parameter up to x% for synthetic minting.
x is potentially between 10-25.
The price of the derivative on the following example will be 1 Ether.
- 1.User puts 100 Ether in Portal to be used for Staking Operations.
- 2.90 Ether is added to the Pool.
- Decreases the pool APR.
- 3.Portal mints 110 Ether worth of gETH, 110 gETH
- Created tokens are not backed by any collateral.
- 4.100 Ether worth of gETH is given back to staker, 100 gETH
- 5.10 Ether and 10 Ether worth of gETH (10 gETH) is put into Bound Liquidity Pool.
- Increases the Pool APR.
- 6.The LP tokens are given to the Withdrawal Contract.
- 7.When user comes back with 100 gETH, which can represent more than 100 Ether, respective LP tokens are burned, and the remaining Ether amount will be filled by Validator Withdrawals.