IVLP Mint and Redeem

Providing liquidity to the IVX 0dte market involves minting and redeeming indices of tradable tokens with predefined desired weights according to risk and open interest desired

Minting

To provide liquidity to IVLP, particpants must purchase $IVLP by minting LP shares at the current index price:

$IVLP purchase can be conducted at any moment in the option life cycle, and variable entry fee is charged, depends on the difference between desired token weight in the pool, and new realized weight after the deposit

• If token new Realized weight $=<$ Token Desired weight

$$(1)      \text{Entry Fee} = \text{fixed\_fee} \times \text{Size Deposited}$$

• If token new Realized weight $>$ Token Desired weight

$$\text{Entry fee} = \min\left(\text{max\_fee}\ ; \text{fixed\_fee} +\left(\frac{\text{Realized weight} - \text{ target weight}}{\text{target weight}}\right) \times \frac{\text{max fee}}{\text{max\_deviation}}\right) \times \text{Size Deposited}$$

Fees are collected in the form of token deposited and transfered to fee splitter

2- Redeem

To redeem liquidity provided to IVLP, participants must sell (burn) $IVLP by redeeming LP shares at the current index price mentioned above at $(1)$. The system will direct the exit tokens to be the least dsired tokens, based on weighted deviation from its desired weight. Leveraging our intergration with Ooga Booga, users will receive their requested tokens without any user experience friction.

Redemptions can occur between 24 hours and 1 hour to expiry, with a time weighted exit fee applied as protection layer against undesriable unrealised P&L lock-ups close to expiry, following the exit fee formula below:

a) Between 24 hours to expiry and $a$ :

$$\text{Time-weighted Exit fee} = \min\left(\frac{1}{(x - a)^n*100} + b\ , C\right) \times \text{size Redeemed}$$

Where

• $x$ is time before expiry (h)

• $C$ is maximum fee charged (Factor not %)

• $b$ is minimum fee charged (Factor not %)

• $n$ is acceleration factor

• $a$ is a defined time before expiry (h)

b) Between $a$ and Freeze time:

$$\text{Exit fee} = C*Size\ Redeemed$$

c) Between Freeze time and Expiry exit is not allowed due to manipulations risk, usually the Freeze duration is 1 hour before expiry

Users will face a cool-down period after depositing or withdrawing, in which they must wait before executing another transaction (security measures

Mint and Redeem parameters:

• fixed Entry Fee (Factor): 0.001 for all assets

• max Entry Fee Factor: 0.011

• max Deviation Accepted: 0.15

• max Exit Fee Factor (fixed fee before expiry time): 0.015

• fees Ascendence Acceleration (n): 2

• min Fee Factor (b) : 0.001

• Min Deposit: 1 In USD

• Min Withdraw: 1 In USD

• Locked Period: 2h

• Max_Fee_Period: 4h

• Cool Down Period: 10min

We suggest to redeem liquidity provided at the early stage of the option life cycle (8:00 AM UTC - 2:00 PM UTC) where dynamic redeem fees are small and overall risk both in terms liquidity provider unrealised PNL and system health is at minimized