🔮Protocol Owned Liquidity
Protocol-Owned Liquidity (POL) refers to liquidity that is fully controlled and managed by the protocol itself, rather than depending on external liquidity providers. In the Solidus Synth ecosystem, POL is a foundational component that ensures price stability, deep liquidity, and sustainable rewards for synthetic assets across multiple chains.
Deep Liquidity & Reduced Volatility By owning a share of its own liquidity pools, Solidus Synth guarantees consistent liquidity for synthetic assets like xsAvax and Ava. This reduces slippage and dampens price swings.
Peg Stability via Auto-Rebalancing If a synthetic asset like xsAvax deviates from its target peg, the protocol can actively rebalance LP positions and liquidity ticks to restore price stability.
Independence from External LPs Unlike traditional DeFi models that rely on third-party liquidity providers (who can withdraw at any time), POL ensures long-term liquidity remains within the protocol.
Defense Against Price Manipulation Deep, protocol-controlled liquidity makes it significantly harder for attackers to exploit low-liquidity conditions through price manipulation tactics.
Sustainable Revenue Generation The protocol earns a portion of trading fees from its own liquidity, creating a self-sustaining revenue stream to fund incentives, token buybacks, and growth initiatives.
How Solidus Builds Protocol-Owned Liquidity
Solidus Synth accumulates POL through multiple channels:
Minting Fees A portion of synthetic asset minting fees is redirected to acquire and lock liquidity into protocol-owned pools.
Auto Liquidity Adds On Minting When minting synths a portion of the 1 - CR difference is automatically zapped into Ava liquidity and held as POL to deepen utility token liquidity and earn trading fees.
Trading Fees & LP Rewards As an LP, the protocol earns trading and arbitrage fees from decentralized exchanges where it provides liquidity.
OTC Bonding Mechanism (Coming Soon) Users will be able to exchange assets with the protocol for discounted tokens, expanding the POL reserve.
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