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DPLP is the platform's liquidity provider token.
We're transitioning DPEX into a test phase, pivoting from DPLP staking to sourcing our liquidity from aggregators. During this phase, 70% of platform fees that previously supported DPLP tokens will now reward DPEX stakers. Await a community vote for final decisions on transitioning to aggregator mode.
DPLP 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 (the total worth of assets in the index, including profits and losses of open positions) / (DPLP supply).
Holders of the DPLP token earn Escrowed DPEX rewards, and 70% of platform fees are distributed in MATIC. Note that the fees distributed are based on the number after deducting [referral rewards] and the network costs of keepers; keeper costs are usually around 1% of the total fees. Staked DPLP token address: 0xd3a829a4C9938F54072bAd827780aFf15335Ec39.
As DPLP holders provide liquidity for leverage trading, they will make a profit when leverage traders make a loss and vice versa. Past PnL data, DPLP price chart, and other stats can be viewed at https://stats.dpex.io.
Fees for buying DPLP will vary based on which assets the index has less or more of; the Buy DPLP page will show which assets have the lowest fee. After buying, your tokens will automatically be staked, and you will start earning Escrowed DPEX and MATIC rewards; you can check your rewards at https://app.dpex.io/#/earn.
The fees to mint DPLP, burn DPLP, or perform swaps will vary based on whether the action improves the balance of assets or reduces it. For example, if the index has a large percentage of MATIC and a small percentage of USDC, actions that further increase the amount of MATIC the index has will have a high fee, while actions that reduce the amount of MATIC the index has will have a low fee.
The token weights can be seen on the Dashboard. Token weights are adjusted to help hedge DPLP holders based on the open positions of traders. For example, if a lot of traders are long ETH, then ETH would have a higher token weight; if a lot of traders are short, then a higher token weight will be given to stablecoins.
If token prices are increasing, then the price of DPLP will increase as well, even if a lot of traders have a long position on the platform. The portion reserved for long positions can be treated as stable in terms of its USD value since if prices increase, the profits from that portion will be used to pay traders, and if prices decrease, the losses of traders will keep the USD value of the reserve portion the same.
If a lot of traders are short and larger weights are given to stablecoins, then DPLP holders would have a synthetic exposure to the tokens being shorted, e.g. if ETH is being shorted, then the price of DPLP will decrease if the price of ETH decreases if the price of ETH increases then the price of DPLP will increase from the losses of the short positions.
Caution should be exercised when interacting with any smart contract or blockchain application. While risks are attempted to be mitigated through testing, audits, and bug bounties, there is always a risk of vulnerabilities in smart contract code.
A non-exhaustive list of some risks:
- Smart contract risks
- Counterparty risks: The DPLP pool is the counterparty to traders if traders make a profit that comes from the value of the DPLP pool
- Token risks: Bridged tokens may depend on the security of the bridge; pegged tokens have risks of depegging.