FLP
FLP is FXDX's Liquidity Provider token which acts as counterparty to the traders. FLP is a index consisting of assets which are used to facililate swaps and perpetual trading.
FLP is automatically staked after minting. No further actions are required.
FLP holders earn upto 65% of the protocol revenue in USDC.
FLP Price is calculated as:
There is a cooldown duration after buying/minting FLP. All FLP holders are free to enter and exit as they see fit after the cooldown period. Current cooldown is 15 minutes.
Users can buy/mint FLP using any index asset and sell/burn FLP to get any index asset. Users will accure FLP rewards on per block interval during the duration of holding FLP.
Risks
FLP gains value if
Traders Net PnL is negative
The assets included in the index are experiencing a rise in their market value.
Similarily, FLP loses value if
Traders Net PnL is positive
The assets listed in the index are experiencing a decline in their market value.
However, if Traders Net PnL is positive (Traders are winning), FLP gets more fees via socialized profit model which ensure their risks are still lower than any other procotol with similar design.
Fees
There is fee of 0.3% for buying/minting and selling/burning FLP. Based on the asset target weight and composition cap, the fees will vary. If one is buying FLP using an asset which is above its target weight, the user will have to pay higher fees and vice versa.
Risk Management
In order to ensure FLP holders who are offering zero-price impact, zero spread order execution, certain caps are in place to ensure maximum capital efficiency while minimizing risks.
100% of the FLP Liquidity is used in following way:
Upto 40% is used for providing liquidity for perpetual futures
Upto 40% is used for providiing liquidity for swaps
Upto 20% is used for providing on-demand liquidity for FLP burn/sell.
These values are adjusted based on market conditions and protocol health.
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