Digital Options Liquidity Providing

The Thales AMM has proven it's reliability by handling thousands of transactions that have generated millions in volume, so it's finally time to allow users to take part in liquidity provisioning for the Thales AMM.

Anyone is able to provide liquidity for the Thales AMM and gain exposure to the AMM's performance. Liquidity Provisioning is available on the Optimism Network , Arbitrum Network and Base with sUSD used as collateral on Optimism, with USDC.e used on Arbitrum and USDbC on Base.

You can take part by visiting https://thalesmarket.io/liquidity-pool

How does Providing Liquidity for the Thales AMM work?

Liquidity Provisioning is the process of providing collateral to a protocol that can then use this collateral to execute trades. This is done by acting as a counterparty to traders by providing collateral to back these trades and is then used to payout successful traders.

You can see all the details for providing liquidity for the AMM in TIP-139.

LP deposits count towards your wallet’s gamified THALES staking rewards as protocol generated volume. Since gamified THALES staking counts volume over a running 4 week timeframe, 100 USD deposited (assuming no change in the AMM’s performance) would equate to 100 USD per week or a total of 400 USD of protocol volume towards gamified staking.

Deposit and Withdrawal Mechanics

Deposits are entered in 1 week long rounds so Profit and Loss (PnL) can be calculated. Traders can make a deposit and their collateral will be queued up to enter the upcoming round. Deposits and withdrawals need to be signaled on the UI and will be performed at the start of the next round.

When a round ends, the AMM's performance from all markets in that round is summed up, and allocated to all liquidity providers proportional to their share of the pool.

  • Each LP-ing round lasts 7 days.

  • Users can deposit at any time during any round. The deposited funds will be utilized as collateral in the AMM starting with the next round from time of depositing.

  • The minimum deposit is 100 USD.

  • A maximum of 100 users can enter the pool at one time.

  • The maximum amount of USD you can deposit is the number of your staked THALES divided by 5.

  • Funds roll over to the next round automatically until a withdrawal is signaled.

  • User can signal a withdrawal at any time during any round. Withdrawals are limited to no less than 10% of your total deposit.

  • The funds that are signaled for withdrawal will be unlocked at the start of the next round from time of signaling.

If you signal a withdrawal, your funds will still be exposed as collateral for the duration of the ongoing round and will only be removed as AMM collateral when the round ends.

Risks of Providing Liquidity to the Thales AMM

Providing liquidity exposes you to various risks including potential losses due to users winning in trading as well as smart contract security risks. Please make sure you understand these risks before depositing.

Liquidity Provisioning is capped to limit exposure for depositors. In the event that the AMM performs in an unexpected way these caps limit the potential downside experienced by depositors.

Caps are updated via the governance process, where stakers can vote to elect council members every 6 months. These council members then vote on community submitted TIPs (Thales Improvement Proposals that act as changes to the protocol) and once approved the Protocol DAO can execute these changes.

20% of each profitable round will be sent to the contract accruing protocol fees and will be distributed to stakers on each weekly staking claim

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