LP Risks

Economic Risk (Negative Pool Days)

Traders might make money systematically.

Scenario:

• Market conditions favor traders

• High win rate (65%+) across all trades

• LP capital decreases week-over-week

Protection:

• Protocol fee: 5% of trading fees → insurance fund

• Insurance fund: Covers shortfalls first

• Haircut: Major drawdown = hair-cut across all LPs

Typical Pool Performance:

• Expected ROI: 15-25% APY (long-term average)

• Variance: 5-10% monthly swings

• Drawdown tolerance: -15% max in bad months