💰SLP (LP Token)

SLP is the liquidity provider token for Storm Trade platform. It's designed to provide liquidity and opportunities for users to earn fees based on trading volume. This guide explains how SLP works, how to mint and redeem SLP tokens, and the benefits and risks associated with SLP participation.

SLP represents a liquidity provider's share in total Vault liquidity. The vault serves as the counterparty to all trades made on the platform:

  • When traders win (positive PnL), their winnings are received from the vault.

  • When traders lose (negative PnL), their losses are sent to the vault.

In exchange, the vault receives a portion of trading fees, liquidation penalties, excessive funding fees and rollover fee. 70% of these fees are proportionally split among SLP shares, incentivizing stakers keep assets in the vault.

Minting SLP

  1. Obtain your USDT/ jUSDT or TON tokens.

  2. Provide tokens on the Vault page by specifying the desired tokens value. SLP tokens will arrive at your address.

Redeeming SLP

On the Vault page, enter the amount of SLPs to withdraw. The amount of SLP you entered will be burned and you will receive your tokens back at the present exchange rate to your designated address.

How SLP Benefits Traders and Holders

SLP provides liquidity for traders, enabling leveraged trading positions. When traders profit, SLP holders might face losses, and vice versa. Although SLP's value is generally market-neutral, holding SLP involves certain risks. SLP stakers can earn up to 70% of platform fees generated through trading activity.

Key Risks to Consider

  1. Smart Contracts: Audited but risk remains.

  2. Counterparty Risk: Trader profits affect SLP holders.

SLP Liquidity Pool Dynamics

The SLP vault receives protocol-generated fees, trader profits and losses, opening/closing position fees, and more. This dynamic causes SLP price to fluctuate over time. While profits from trader P&L decrease SLP price, protocol-generated fees increase it. The overall trend suggests that SLP's price will likely rise over time due to net inflow exceeding net outflow.

SLP Price Calculation

SLP price is based on the number of USDT/ jUSDT/ TON tokens and SLP tokens in the vault. The formula is:

PSLP=USDTfree vault/SLPsupplyP_{SLP} = USDT_{free\ vault} / SLP_{supply}

Minting or redeeming SLP doesn't impact its price, but it influences the rate at which the price changes.

Liquidity Buffering (TO BE IMPLEMENTED)

The buffer is a reserve amount of tokens that will help regulate the revenue of liquidity providers and balance the economic model of the protocol.

  • If the SLP token (Storm Liquidity Provision) falls and the protocol's liquidity capitalisation drops to critical values, the buffer will be used to restore the SLP exchange rate and bring the capitalisation level back to normal values.

  • If SLP rises above certain values, a part of the income will be used to buy back the STORM token (buyback).

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