Protocol's GLP Reserve (The Reserve)
Last updated
Last updated
Instead of trying to completely eliminate the market volatility of Risk 2 and 3 mentioned in Market Volatility Risks, which is almost impossible, we simply decided to raise funds and create a reserve to absorb said risks.
=> We call it the Protocol's GLP Reserve (The Reserve), and it will come with the following functions and benefits:
The Reserve will absorb the risk of Delta-Neutral Vaults underperforming due to impermanent loss by making up for the difference between the value of the Delta-Neutral Vaults' underlying GLP and users' staked assets.
The Reserve will always consist of an amount of GLP worth 5-15% of the total TVL of the three Delta-Neutral Vaults (If Vaults TVL is $2,000,000; there will be $200,000 worth of GLP in The Reserve).
Funds for The Reserve will be provided 100% by GMD Treasury.
The Reserve will also gain the $GLP's profits from traders' losses. In the long run, traders are statistically destined to collectively lose.
Based on the historical data of GLP's performance compared to Single-Assets, The Reserve is significantly more likely to financially benefit from the volatility.
=> Simply put, The Reserve is designed to take on more risks toward the protocol while obtaining more benefits and rewards for our users.
