El Dorado Exchange
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ELP Liquidity Pools

In EDE, we offer 2 different ELP liquidity pools for users with different risk preferences.

Overview

Holders of ELP tokens, who provide liquidity, serve a crucial role within the EDE ecosystem. Their contributions determine the maximum total open interest for the protocol and they bear the risks associated with trading activities. In recognition of their efforts, liquidity providers receive 45% of the trading fees and the profit and loss (PnL) generated by traders.
EDE developed a hybrid liquidity mechanism that allows ELP holders to provide liquidity through a smart router. The multi-asset ELP-1 pool is designed as a bundled index of top cryptocurrencies, enabling liquidity providers to participate in sharing protocol revenue while holding a diversified crypto index. Conversely, providing liquidity for the Synthetic ELP-3 pool carries no risk of holding cryptocurrencies, as it uses USD collateral by design.
The ELP-1 token represents an index of assets utilized for swaps and leverage trading. These tokens can be minted using any index asset and burnt to redeem any index asset.
There are two ELP pools containing different assets from which various ELP tokens can be minted, such as $ELP1, $ELP2, and $ELP3. While these two different ELP token types share the same functionality, they differ in potential revenue generation.
45% of the protocol revenue will be distributed to the ELP tokens holders and stakers in the form of $EUSD, while the stakers will also receive extra $alphaEDE rewards.
Holders of the ELP tokens can also choose to stake their ELP tokens to receive extra $alphaEDE rewards.
Note that the protocol revenue distributed is based on the number after deducting the network costs of keepers, keeper costs are usually around 1% of the total fees.
The keepers are price feed and position bots.
As ELP token holders provide liquidity for leverage trading, they will make a profit when leverage traders make a loss and vice versa.

Different ELP Pools

El Dorado Exchanged is focused on not only offering a diverse range of assets to trade from, but also keeping assets segregated so higher risk assets are kept away from lower risk assets. To achieve this, there will be at least 2 different ELP's for liquidity providers to provide liquidity for. These are:

​ELP-1 & ELP-3

Each pool localizes the fees generated to the pool & gEDE lockers. Fees generated by $ELP-1 are not shared with $ELP-3.
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ELP Trading fee (EUSD)APR explained

When a transaction occurs, the EUSD generated is distributed to ELP users' accounts immediately and settled in real-time.
In addition, the ELP APR is calculated based on the transaction fee data from the past 7 days. Due to the unpredictable fluctuations in transaction fee generation, it is impossible to accurately predict future earnings beyond the next year. Therefore, the most recent week's data is used to simulate future earnings.
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Risks

ELP isn't designed as just an indexed token comprising of different weights of different tokens, but also as the liquidity provider token for the EDE platform.
This means, when you hold ELP, you are exposed to several different risks, such as swaps arbitraging, traders profiting from longing or shorting assets, as well as general negative market movements which reduce the value of the underlying collateral.
It is advised you fully understand the risks first before providing liquidity on EDE.
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.
Last modified 15d ago