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  • Welcome to AZKA FINANCE
  • AZKA Token Murabaha Overview
    • General
    • System Components
    • Protocol Architecture
    • Token Types
    • Use Cases
    • AZKA RoadMap
  • Murabaha Pools V1
    • Providing Liquidity
    • Pool Metrics
    • vROI
    • Murabaha Fee Rate Curve
    • Shariah Considerations
  • Executing Murabaha V1
    • Pre-Requisites
    • Initiating Murabaha
    • Executing Murabaha
    • Quote Methodology
      • Amount of Murabaha Token Required (AMTR)
      • Required Amount of Currency (RAC)
    • Shariah Considerations
  • Managing Murabaha V1
    • Managing Murabaha
    • Liquidation Parameters
    • Liquidation Mechanics
    • Shariah Considerations
  • Token Murabaha Risk Framework
    • General
    • Asset Risk
    • Liquidity Pool Risk
    • Liquidation Risk
    • Risk Parameters
  • AZKA Token Design and Tokenomics
    • General
    • Specific Utilities (AZKA, vAZKA, dLP)
    • Token Distribution
    • vAZKA
      • vAZKA Reward Distribution
    • dLP (Dynamic LP)
      • Initiating dLP
      • vAZKA Murabaha Eligibility
      • Managing Eligibility
      • Claiming vAZKA
  • Governance
    • General
    • DAO Structure and Policies
    • azTeams
  • Developer Docs
    • Murabaha Pools
    • Executing Murabaha
    • Liquidations
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  1. AZKA Token Design and Tokenomics
  2. dLP (Dynamic LP)

Managing Eligibility

Eligibility Dynamics

The eligibility requirement is specific to each pool rather than the users total deposits/debts for all pools. For example a user with the following AZKA portfolio:

1) AZKA dLP with a 'Virtual USD Value' of $1000

2) 20K worth of Deposits in the azUSDC pool

3) 50K worth of Debts owed to the azUSDC pool

4) 100K worth of deposits in the azETH pool

5) 10K worth of debts owed to the azETH pool

Assuming the eligibility threshold is 5%, the user would be eligible for vAZKA rewards on their azUSDC deposits and their azETH debts but in order to start earning vAZKA rewards on their azUSDC debts and their azETH deposits they would need to do the following:

1) Either increase the 'Virtual USD Value' of their dLP by either topping up or extending.

2) reduce the amount of debt they owe by repaying approximately 30K USDC to the azUSDC pool.

3) reduce the amount of deposits in the azETH pool by 80K

User specific Interactions and Parameters

Agent specific paramters (azPool LP's)

i) All users can meet the eligibility requirement before or after depositing/executing Murabaha.

iii) Depositors who are eligible for rewards and decide to send azTokens from their wallet to another wallet will no longer be eligible for the amount that has been sent. Any remaining deposits will continue to accrue rewards until the expiration of the dLP or ineligibility is established.

iv) Expiration of a users dLP or falling below the requirement will prompt bounty hunters to disqualify the users from continuing to earn vAZKA rewards. However, if for whatever reason bounty hunters don't execute the disqualification, users will continue earning vAZKA rewards until they make another interaction with the protocol.

v) every new deposit/Murabaha will increase the users need to manage their eligibility, whereas repayment of debts or removal of deposits decrease the users need to manage eligibility.

vi) As a result of market dynamics (ie, changes in the Underlying Uniswap LP position) any increases in the users 'Virtual USD Value' beyond the threshold would not result in a automatic activation of any existing debts/deposits that are not eligible and not accruing rewards. The user would need to activate them by either topping up, extending or clicking the 'activate rewards button'.

Disqualification & Re-activation

We have established that the 'Virtual USD Value' is a function of the dLP multiplier and the USD value of the underlying AZKA/ETH LP. Hence, a users 'Virtual USD Value' can change in real time for two reasons:

1) Fluctuations in the underlying USD value of the users AZKA/ETH LP due to market forces (ie,. the price of AZKA and/or ETH increasing or decreasing).

2) Weekly decay on the dLP multiplier.

If the 'Virtual USD Value' of users dLP position drops below the eligibility threshold, other eligible dLP holders can disqualify them from earning rewards. However, if a user is disqualified and then as result of the AZKA/ETH LP's value increasing, suddenly becomes eligible again, they would need to reactivate their eAZKA rewards manually by clicking the 'Activate Rewards' button in the UI.

Eligible dLP holders have a motivation to disqualify those who are ineligible, as these ineligible participants unfairly consume a portion of the rewards that should be distributed among the eligible holders. On the other hand, there is no incentive for anyone, except for the dLP holder who has just regained eligibility, to facilitate the reactivation of their rewards. Therefore, to prevent disqualification or the necessity of reactivating rewards, it is advisable to consistently maintain a substantial buffer above the required eligibility threshold.

Example

Some user has $10K worth of deposits and $20K worth of debts in the azUSDC pool.

The user has a dLP position with a 'Virtual USD Value' of $1000. Assuming the eligibility requirement is 5%, the user is eligible for vAZKA rewards on both their deposits and debts.

If the users 'Virtual USD Value' suddenly becomes $500 due to time decay on their multiplier and/or a decrease in the underlying USD value of their locked AZKA/ETH LP, the user would still be eligible for their azUSDC deposits but can be disqualified from earning vAZKA rewards on their azUSDC debts. To regain eligibility on their debts, the user can either:

1) top up or extend their dLP position to generate a higher 'Virtual USD Value'

2) Repay 10K worth of debt to the azUSDC pool.

If the user decides not to do any of these they will not earn any vAZKA rewards for their azUSDC debts. However, if due to the USD value of the underlying AZKA/ETH LP increasing, the users 'Virtual USD Value' suddenly returns back to $1000, their eligibility status would be set for re-activation in the UI. To complete this process, the user must click the re-activate button and submit a transaction. Users who are too close to the eligibility threshold are at risk of entering a repetitive cycle of disqualification and re-activation. To avoid this, it is advised to maintain a healthy buffer above the eligibility threshold through topping up/extending.

Disqualification Bounties

AZKA will provide a 'Disqualification Bounty' program akin to running a liquidation bot, that can be accessed directly through the UI or with individual searcher bots.

Other dLP holders that meet the eligibility requirement can monitor available disqualification bounties in the Bounties section of the UI and disqualify ineligible dLP holders by selecting "claim" and confirming the transaction, upon which the vAZKA bounty will be sent to the dLP holder. Any earned vAZKA can be vested for AZKA or staked to earn a portion of protocol fees.

The dLP holder wishing to disqualify must be eligibile for the azPool they are initiating the disqualification for. For example, if the disqualification is triggrered due to a user not meeting their azUSDC deposits, the user executing the disqualification must be eligible on their azUSDC deposits.

This has the added benefit of further decentralising actions taken on the protocol, allowing users to point and click to remove ineligible participants while benefiting the protocol (and themselves).

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Last updated 1 year ago