LP and Swap Dynamics

Basics

• An Opthy is an NFT minted by the LP.

• A single contract will hold all of the Opthy NFTs.

• When an Opthy expires, the UI will present the LP with the option to reclaim the remaining liquidity balance and staking tokens, which when triggered will burn the Opthy NFT.

• Multiple Swappers per Opthy are enabled.

Swap Fee

Each swap has a fee, which goes to the LP

On blockchains without Chainlink integration

The swap fee is a static value set as the middle amount of the min and max of the formula used for Chainlink capable chains (described below), which is currently 0.2%.

On blockchains with Chainlink integration

The swap fee is calculated as:

• Swap fees range between Min 0.1% and Max 0.3%

  • Fee min, max, and mechanism can be changed through DAO governance.

• Oracle checks the global market price of the token put in by the Swapper for the swap (i.e. the "Swapper Token")

• Our smart contracts will compare the market value of the token with the fixed swap rate set in the Opthy, and based on the time remaining until expiry, it will determine the fee price relative to the USD value of the tokens remaining for the LP in the Opthy.

• If the global market USD value of the Swapper Token is higher than the Fixed Swap Price set in the Opthy, then the min fee is charged for the swap.

• Conversely, if it's lower, then the Swapper will have have a higher fee calculated for the swap.

  • How much higher is determined by the time remaining on the contract using the following formula: $Max Fee * Duration Progress$
  • For example: If $Max Fee = 0.3\%$ and we are 90% into the duration of the Opthy (i.e. $DurationProgress = 0.9$​), then we have $0.3\% * 0.9 = 0.27\%$​

  Below are two scenarios to explain:

  • Imagine we have an Opthy with 10,000 USDT and 100 BTC with a duration of 10 days

    • Case 1:

      • On day 1, if the Swapper wants to swap 100 USDT for BTC, and at that point in time the global market price of BTC/USDT is lower than the fixed exchanged rate set inside this Opthy, then the swap will be charged the min fee

    • Case 2:

      • On day 9 swapper wants to swap 100 USDT for BTC and on that day the price of BTC/USDT is higher than the one set inside Opthy the swap will be charged the max fee X (0.9)

Fee Distribution

• 100% of the fee will go to the LP of the Opthy.

• Whichever token is being swapped from is the token that will be used for the fee. e.g. If the Swapper swaps USDT into BTC, then the LP gets their fee paid in USDT.