SLP Token

SLP is the liquidity provider token of perp contracts trade, the Liquidity providers earn fees from perp trading function.

SLP consists of an index of assets used for swaps and leverage trading. It can be minted using any index asset and burnt to redeem any index asset. The price for minting and redemption is calculated based on (total worth of assets in index including profits and losses of open positions) / (SLP supply).

Buy SLP Token

SLP tokens can be bought using the SLP Pools page. Options to bridge funds to buy the tokens can be found at the bottom of the Buy page.

Steps:

• Select the buy Protocols token page you'd like to purchase in the "Buy SLP" box

• There will be a positive or negative price impact depending on whether your purchase improves or reduces the balance of tokens in the pool

• The price impact will be shown in the "Buy SLP" box

• If the pool is mostly balanced, a large purchase may result in a large negative price impact, to avoid this, select the "Pair" option and buy the SLP token with an equal USD amount of long token and short token

Sell SLP Token

SLP tokens can be sold using the SLP Pools page.

Note that since tokens in a market are reserved based on the total open interest of the market, the liquidity available for redemption is capped at the tokens in the pool multiplied by the pool's reserve factor minus the tokens reserved. If this capacity is reached, liquidity providers would need to wait for positions to close before selling the SLP token or for liquidity to be deposited by other providers. The borrow fee rate in this case would also be higher which should help to incentive deposits.

Token Pricing

There may be a spread for some index tokens, minting SLP will be based on the lower value of the index token and redeeming SLP will be based on the higher value of the index token. For stablecoin tokens, the spread will be from the Pyth price of the stablecoin to 1 USD. The price of SLP will depend on the spread of the tokens in the pool as well.

Adaptive Funding

Funding rates gradually adjust over time based on the long and short ratio.

For example, if the total long open interest is larger than the short open interest then the funding rate that longs pay shorts will gradually increase until the difference between the long and short open interest is below a certain threshold or an upper limit is reached, at which time the funding rate will remain constant.

If in this scenario more shorts are opened or longs are closed such that there are now more shorts than longs then the funding rate that longs pay shorts will gradually decrease until the difference between the long and short open interest is below a certain threshold.

If there remains more shorts than longs then the funding rate will gradually adjust in the other direction such that shorts will pay longs a funding rate that gradually increases until the difference between the long and short open interest is below a certain threshold or an upper limit is reached.

Execution Fee

There are two transactions involved in opening / closing / editing a position:

• User sends the first transaction to request open / close / deposit collateral / withdraw collateral

• Keepers observe the blockchain for these requests then execute them

The cost of the second transaction is displayed in the confirmation box as the "Execution Fee". This network cost is paid to the blockchain network.

Price Impact Rebates

Under normal circumstances, the long and short open interest should be mostly equal and price impact should be minimal.

However, it is possible in times of volatility for the long and short open interest to be imbalanced leading to a high price impact.

Price impact rebates help to reduce the effect of this. Each market has a maximum price impact as a guideline; if a trade is closed with a price impact higher than this percentage then the additional impact would become claimable after approximately 10 days.

For example, if the maximum price impact for a market is 1% and a trade is closed with 3% negative price impact, then the collateral equivalent to 2% negative price impact would be claimable after a few days on the interface.

The purpose of having a delay of a few days is to guard against price manipulation attempts. In the case of a price manipulation attempt, rebates should be reviewed and only applied to accounts that were not involved in the price manipulation.

Note that this rebate only applies to closing / decreasing of positions; for opening / increasing of positions there is no maximum price impact. For market increase orders, the price impact would be shown on the interface so that users can decide if the impact is acceptable. For limit orders the acceptable price including any price impact must be met for the order to be executed.

Max Leverage

The max allowed leverage of a pool will decrease as the total open interest of the pool increases, this is to guard the pool against gaming of price impact using high leverage positions. This mainly affects markets with less liquidity but can affect high liquidity markets if the open interest is very large. The interface will show a warning if the max allowed leverage will be exceeded. Note that this only affects opening / increasing of positions, it will not affect positions that have already been opened. For closing / decreasing of positions, if the max allowed leverage would be exceeded when decreasing a position then the order can still be executed, but the collateral within the position would not be reduced.