Liquidity Provider (LP) Staking

Staking Stablecoins to join PEX LP

Liquidity Provider (LP) staking allows users to contribute to the platform's liquidity and earn rewards for their participation. PEX introduces a unique difficulty mechanism requiring users to hold a certain amount of PEX tokens to mint the LP token, named PLP.

  • In order to prevent the return dilution with the PLP inflation, a complex minting difficulty will be set as a gatekeep for the additional PLP minting.

  • In a certain period, there will be Max total supply (LMT) and Target total supply (TGT)* which can satisfy the protocol trading needs. Also, the real-time total supply at mint (CUR) will be marked in the difficulty calculation.

TGT will be estimated by the last 7 days' upper quartile usage to ensure the LP can satisfy the trading needs.

There will be three cases:

  1. If CUR <= TGT, Difficulty = 0. In this case, investors can mint the PLP without any cost.

  2. If TGT < CUR <= LMT, Difficulty = (CUR - TGT) / (LMT - TGT) * Constant. In this case, investors are required to consume PRT (Governance Token staking rewards), which varies to the difficulty, for minting PLP.

  3. If CUR > LMT, Difficulty = infinity. In this case, nobody can mint any extra PLP.

Defining a parameter R% at which if investors mint PLP from TGT all the way to LMT, investors need to burn R% of total PRT and stPRT.

With real-time total supply = m, a user want to mint r GLP so that n = m + r, with TGT <= m < n <= LMT

With real-time total supply = m, a user wants to mint r GLP so that n = m + r, with TGT <= m < n <= LMT

  • Holding PEX Tokens: Users must hold a specific amount of PEX tokens in their wallet for earning PRT to be eligible for minting PLP tokens when difficulty > 0.

  • Providing Liquidity: Users can provide liquidity by depositing supported tokens into PEX's liquidity pools. In return, they receive PLP tokens representing their share of the pool, provided they meet the PEX holding requirement.

  • Staking PLP Tokens: Users can stake their PLP tokens in designated staking pools to earn rewards.

  • LP Staking Rewards: Rewards for LP staking are typically distributed in PEX tokens or other supported tokens. The rewards are calculated based on the user's share of the staked PLP tokens and the current reward rate.

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