Market Liquidity Yield
Community enabled market making through ETH liquidity staking.
Community-Enabled Market Making
In an industry that thrives on innovation and community, our platform introduces a groundbreaking feature: community-enabled market making. This model allows users to directly contribute to and benefit from the platform's liquidity and trading activities. By staking Ethereum (ETH) in the leverage pool, users not only facilitate leveraged trades for others but also earn a dynamic yield from leverage fees and the gains of liquidated positions. This unique approach democratizes market making, traditionally the domain of large institutions, and redistributes financial rewards back to the community members, fostering a truly participative ecosystem.
How It Works
The foundation of our community-enabled market making lies in the leverage pool, a communal pot of Ethereum (ETH) that users can stake their assets into. Here’s a step-by-step breakdown:
Staking to the Leverage Pool: Users contribute ETH to the leverage pool, providing the necessary liquidity for other traders to execute leveraged trades on the platform.
Earning from Leverage Trades: A portion of the fees collected from these leveraged trades is then distributed among the stakers as a reward for providing liquidity. This creates a direct financial incentive for users to participate in market making.
Benefiting from Liquidations: In cases where leveraged positions are overexposed and subsequently liquidated, a share of the proceeds from these liquidations is also distributed to the stakers. This adds an additional layer of potential yield, reflective of the risks involved in providing leverage.
Dynamic Yield
The yield that stakers can earn from the leverage pool is dynamic and variable. It is influenced by several factors:
Platform Volume: The more active trading is on the platform, the greater the volume of leveraged trades, leading to higher fees collected and, subsequently, higher rewards for stakers.
Liquidations: The yield is also affected by the frequency and volume of liquidated positions. Successful liquidations, resulting from overexposed leveraged trades, contribute additional funds to the pool, which are then shared among the stakers.
Staker Participation: The size of an individual’s yield is proportional to their contribution to the leverage pool relative to the total pool size. This means that as more users participate or existing stakers increase their stakes, the individual share of the yield may fluctuate.
This dynamic yield model not only incentivizes community participation but also aligns the community's interests with the health and success of the platform. By actively engaging in market making, users play a pivotal role in the platform’s liquidity, stability, and profitability, all while having the opportunity to earn a variable yield reflective of their contribution and the platform's overall performance.
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