Boosted Trading Fees

Boosted Trading Fees to oCHi

Boosted Trading Fees

Whether you have provided liquidity to USC/ETH or CHI/ETH or both pools on Uniswap, you are entitled to receive all the trading fees generated by Chi Protocol's POL during the option's lock-in period. Following impermanent loss calculation since the oCHI ERC-721 token was issued or the last time the oCHI recipient claimed their fee earnings, trading fees are uniformly distributed across oCHI lockers based on their oCHI amount. Users can claim their fee rewards before and after the lock-in window expires.

Example: Locked oCHI Fees

  • oCHI recipient provides $80,000 worth of USC/ETH LP position pair, selects a month lock-in period and receives $100,000 of oCHI claims following a boosted discount strike price calculation.

  • For the same month, the TVL on the USC/ETH pair on Uniswap has been stationary at $12,000,000, and the net of impermanent loss earned trading fees are $150,000.

  • POL on USC/ETH and CHI/ETH was $20,000,000 for the same month:

    • $10,000,000 in USC/ETH

    • $10,000,000 in USC/ETH

  • Assume POL’s net of impermanent loss earned trading fees for the same month are $380,000:

    • $125,000 from USC/ETH pool

    • $255,000 from CHI/ETH pool)

  • Suppose there are $2,000,000 worth of locked oCHI in the same month.

  • The regular LP strategy would have generated $1,000 in trading fees (80,000/12,000,000 * 150,000).

  • oCHI generates $19k in trading fees (100,000/2,000,000 * 380,000).

That is approximately 20x more fees than a simple DEX LP position

oCHI APR Calculation

The oCHI Annual Percentage Rate (APR) is determined through a formula that considers various factors, such as the weekly accrued POL trading fees and the total amount of locked oCHI.

*Note: APR is computed every week and all calculations of fee earnings are net of impermanent loss and measured in USD.

Assuming there are no oCHI claims locked, then the trading fees earned by the protocol’s POL are distributed to veCHI lockers.

Claiming Trading Fees

The DSO contract operates on weekly epochs. Each week, the contract computes the earned rewards. Assuming the POL has earned trading fees after considering impermanent loss calculations, the earnings are distributed uniformly across all locked oCHI in the underlying currencies of the LP token, and the users can claim them anytime.

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