dLP Design

We’re introducing the dLP (Dynamic Liquidity Provisioning) mechanism in Lybra V2. To receive esLBR emission from the Mint Pool, users will be required to maintain a minimum 2.5% threshold in locked Dynamic Liquidity relative to the total value of their loan.

For example: If User A mints 1,000 eUSD but provides $0 of LBR/ETH dLP tokens, they would NOT be eligible for esLBR emissions. On the other hand, if User B mints 1,000 eUSD and provides $50 worth of LBR/ETH dLP tokens, this user would be eligible for esLBR emissions (assuming the minimum 2.5% threshold continues to be met).

If the qualifier drops below the minimum 2.5% threshold, all of the user's unclaimed esLBR rewards become unclaimable. Simultaneously, a bounty equal to the total amount of the user's unclaimed esLBR will be placed. This bounty can be purchased by any user at a 40% discount in LBR or in eUSD.

The LBR received will 100% be burned, if the purchase is made in eUSD, it will be strategically reserved as a part of the protocol's Stability Fund. This Stability Fund serves a critical function in ensuring the stability of the protocol by helping to maintain the peg of eUSD, especially in instances where eUSD is trading above its peg.

Explanation: When <2.5% threshold, esLBR emission continues, thou all of the user's unclaimed esLBR rewards become unclaimable. Before user threshold back to ≥ 2.5%, other users can purchase all of his unclaimed esLBR at a discount. If no other users purchase his unclaimed esLBR, when his threshold back to ≥ 2.5%, he can still claim all his unclaimed esLBR rewards.