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zeekay
abf99d05fc
Restructured from flat .tex/.pdf files into per-paper subdirectories. Added Antje Worring as co-author on all papers. Synced PDFs to pdfs/ for download site.
60 lines
1.8 KiB
TeX
60 lines
1.8 KiB
TeX
\section{Economic Model}
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\subsection{Trading Fees}
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Dynamic fee model balances revenue and volume:
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\begin{equation}
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f_{\text{trade}} = f_{\text{base}} \cdot \left(1 + \alpha \cdot \frac{\text{OI}_{\text{imbalance}}}{\text{OI}_{\text{total}}}\right)
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\end{equation}
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\subsection{Funding Rate Economics}
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Funding payments create equilibrium:
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\begin{theorem}[Funding Rate Convergence]
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Under continuous trading with rational agents, the time-weighted average funding rate converges to the basis between perpetual and spot prices:
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\begin{equation}
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\lim_{T \to \infty} \frac{1}{T} \int_0^T F_t \, dt = \bar{r} - \bar{y}
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\end{equation}
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where $\bar{r}$ is average interest rate and $\bar{y}$ is average dividend yield.
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\end{theorem}
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\subsection{Liquidation Incentives}
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Liquidator compensation ensures timely execution:
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\begin{equation}
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R_{\text{liquidator}} = \min\left(\text{Penalty}, \max\left(\text{GasCost} \cdot 2, 0.0025 \cdot S_{\text{liquidated}}\right)\right)
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\end{equation}
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\subsection{Value Accrual}
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Protocol value flows to token holders:
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\begin{figure}[h]
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\centering
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\begin{tikzpicture}[
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node distance=1.5cm,
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box/.style={rectangle, draw, minimum width=2.5cm, minimum height=1cm},
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arrow/.style={->, thick}
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]
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\node[box] (traders) {Traders};
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\node[box, right=of traders] (protocol) {Protocol};
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\node[box, right=of protocol] (lps) {LPs};
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\node[box, below=of protocol] (insurance) {Insurance};
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\node[box, above=of protocol] (stakers) {Stakers};
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\draw[arrow] (traders) -- node[above] {Fees} (protocol);
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\draw[arrow] (protocol) -- node[above] {70\%} (lps);
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\draw[arrow] (protocol) -- node[left] {20\%} (insurance);
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\draw[arrow] (protocol) -- node[left] {10\%} (stakers);
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\draw[arrow, bend left] (lps) to node[below] {Liquidity} (traders);
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\end{tikzpicture}
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\caption{Protocol value flow diagram}
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\end{figure}
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