LP Positions

LP positions are fungible representation of an LP's shares of the pool's reserves. Pool reserves are broken down into two main categories, and four sub-categories

1. Native Token Reserves

   • Native Token reserves directly stored in the pool.

   • Native Token reserves deposited into a lending market to earn passive yield. As long as the lending protocol allows for instant withdrawals, these reserves can readily be accessed by the pool and considered liquid.

2. LST Reserves

   • LST reserves stored directly in the pool.

   • LST reserves currently locked in the LST Protocol Withdrawal Queue. These reserves cannot be made available to the pool upon request, and are considered illiquid.

LP Actions

There are two main actions that liquidity providers can take: Deposit to mint a new position, or Withdrawal to burn and redeem a position.

LP Deposit

Wrapped Native Tokens are sent to STEX AMM via the deposit() function, and the corresponding LP shares are minted. Optionally, there is a custom DepositWrapper.sol contract where Native Tokens can be sent directly and wrapped before going through STEX AMM. The Deposit UI hosted on app.valantis.xyz supports Native Token deposit & withdrawals using DepositWrapper.sol.

LPs deposit only the Native Token, but their position is denominated in all four reserve types. When an LP sends Native Token to the pool, their share of the entire pool reserves are calculated using the true rate of LST:Native Token and are minted fungible shares of the pool.

It's important to note that in the case where the pool has LST reserves, particularly LST reserves in the form of an illiquid withdrawal queue position, the LP has made a portion of their position illiquid upon deposit.

In the case where a portion of LP reserves are held in illiquid position, LPs have two options for withdrawal.

1. LP Withdrawal Instant: LPs can claim the entirety of their position, including the LST position of their position in the form of native token, by converting both their LST reserves in the pool and LST reserves in the withdrawal queue to Native Token for a fee. This fee is the same as swapping the illiquid LST portion for Wrapped Native Token against the pool.

2. LP Withdrawal Queued: LPs claim the liquid portion of their Native Token Reserves instantly, and wait for the LST portion of their reserves to mature via the Native Withdrawal mechanism. Claimable from the Withdrawal Module at a later date.

Both these withdrawal types are covered in the following sections.