Pool Actions

Prerequisites

Make sure you've set up and connected your wallet on the Arbitrum One network. You can interact with the pools directly through the pool interface or by using the contract API.

Deposit

Click on Deposit, then select an asset and an amount to deposit into the pool.

By depositing in a single asset pool, you'll only be exposed to trading P/L and fees in that asset. To receive exposure to trading activity across assets, you can split your deposit across the ETH and USDC pools.

Withdraw

Click on Withdraw, then select an asset and an amount to withdraw from the pool.

You can withdraw funds from a pool at any time after a cooldown period has passed since your last deposit (usually a few minutes).

Fees

The financial health of the liquidity pool is protected by implementing a fee on deposits and withdrawals. This fee is directly correlated to the UPL of the traders in the pool. The deposit fee is 0% if the UPL is positive, while the withdrawal fee is 0% if the UPL is negative.

Deposit Fee

When a trader makes a deposit, a fee may be deducted from the deposited amount if the pool has an overall unrealized loss. This deposit fee is calculated according to the following formula: IF (globalUPL - bufferBalance < 0)

$Deposit Fee= BPSDIVIDER * (bufferBalance - globalUPL) / (poolBalance + amount)$

The purpose of this fee is to discourage opportunistic behavior by new participants who contribute funds to the pool during periods of high unrealized losses and benefit from subsequent liquidations or profit recoveries without having shared in the risk when the losses occurred.

Withdrawal Fee

IF (globalUPL - bufferBalance > 0)

$Withdrawal Fee= BPSDIVIDER * (globalUPL - bufferBalance) / (poolBalance + amount)$

Similarly, a withdrawal fee is charged when traders attempt to withdraw funds while in a state of unrealized profit. This fee ensures that participants do not leave the pool, leaving others to bear the unrealized losses. The fee on withdrawals is set in such a way that it proportionally affects those in profit, thus discouraging premature or strategically timed withdrawals.

Purpose of the Fee Mechanism

• Protection against gaming the system: The fee mechanism acts as a deterrent against attempts to exploit fluctuations in the liquidity pool for personal gain at the expense of the health of the pool.

• Risk and reward sharing: It ensures that the risk and potential rewards of participating in the liquidity pool are shared more equitably among all pool members.

• Stability in Pool Health: By discouraging sudden inflows and outflows based on pool performance, the mechanism promotes greater stability in the liquidity available to traders.