The primary objectives of providing liquidity on IVX are:

  • To collateralize option positions initiated by traders, ensuring liquidity for users seeking to exit before the expiry of their positions.

  • To collateralize dynamic delta hedging trades on external perpetual protocols, effectively reducing market exposure on the liquidity pool

The process of providing liquidity on IVX can involve depositing native $USDC tokens into the queue contract. In return, the queue contract mints an equivalent $IVLP ERC-20 token serving as proof of the liquidity provider's deposits.

To withdraw from IVLP, the liquidity provider is required to sign an order on the queue contract. The equivalent amount of $USDC, at the price of $IVLP at the chosen epoch's end, is then transferred to the liquidity provider.

Assets within the queue are deposited or withdrawn from IVLP every 24 hours, coinciding with the expiry date of option positions (8:00 AM UTC)

The price of $IVLP at any moment in time is given by the formula below :

IVLP=Hedging portfolio assets + Collateralization assets + Fees generatedTotal IVLP supply\LARGE IVLP = \frac{{\text{{Hedging portfolio assets}}\ +\ \text{{Collateralization assets + Fees generated}}}}{{\text{{Total IVLP\ supply}}}}

Benefits of providing liquidity on IVX:

  • Receive 67.5% fixed open and close fees, along with dynamic open fees, in the form of $USDC

  • Earn a portion of the liquidation fees, in the form of $USDC

  • All fees received are auto compounded automatically into the IVLP pool, contributing to the growth of $IVLP token itself

  • Obtain an ERC-20 token usable in external Defi applications, or as collateral on IVX portfolio account

  • Participate in the sIVLPprogram to earn additional rewards within the IVX ecosystem

The risk associated

Providing liquidity on IVX carries a few risks, including smart contract risks, and market exposure risks during the hedging process. For that reason, it is highly advised for users to conduct their research before engaging in liquidity provision on IVX.

You can learn more about the hedging process here Dynamic Hedging