Technical Overview
A technical overview of Polysynth Protocol
Technical overview of Polysynth Protocol
Manager: An interface to access information and perform actions across all components.
Vault: A vault is a smart contract that holds all the collateral backing the VMM. This collateral is the total collateral posted by the traders for their positions. The settlement between traders happens through the collateral in the vault.
โ€‹VMM: A VMM is the pricing engine that maintains the state of the system and provides a price for each transaction on the protocol. It keeps a record of all positions, reserves, prices and trade snapshots and helps in state transition post every trade.
Liquidation Bots: Smart contracts cannot execute code without external triggers. Liquidation bots can be run by anyone and are used to trigger a smart contract, which then checks relevant conditions before liquidating the position.
Insurance Fund: In a situation where a trader's balance goes negative due to slippage and severe market conditions, bad debt accrues on a traderโ€™s position. The system will use money from the insurance fund to make up the balance until the entire insurance fund gets utilised. The staking pool is used as a backstop to the insurance fund in case additional funds are required.
Treasury: Fees/Revenue generated from several operations like trading, bond sale, DAO investment returns gets accrued to the treasury. The treasury acts as a backstop for the staking pool.
Staking Pool: POL token holders stake their tokens in the pool to earn rebase rewards. POL rebase rewards are linked to protocol growth and staking streak. Reward rebase is applied every 24 hours.
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