Liquidity Removal

LPs can remove liquidity either partially or fully at any time whilst the positions owned would be released for quotes and transferred. The LP would acquire amounts equivalent to the value of positions and shares owned after liquidity removal. Similar to the situation explained previously with liquidity addition, as each trade undergoes smart contract on-chain in sequence accordingly under a first-come-first-serve basis executed by the miners, the actual values executed are determined later by the final on-chain transaction . Please be reminded that the allocation of shares relating to the amount of positions owned for the new LP upon liquidity adding dilutes that of the current LPs.

Positions offset

In order to reduce the friction cost of withdrawing from the pool, a mechanism has been designed to not transfer positions to other pools during withdrawal. If the liquidity is sufficient, no positions will be transferred, allowing users to withdraw funds directly. The rule is as follows,

Utilization less than 40%, liquidity removal would proceed without offsetting position

The transfer of positions would follow the rule below with the aim to forgo the maximum amount of inefficient margin within the pool, improving the liquidity, and lowering the overall risk of the pool.

Position offsetting order: 1. Sell > Buy 2. OTM > ITM OTM- Further Strike Price > Closer Strike Price 3. Close to expiration > far from expiration

Liquidity removal should work under normal circumstances except that when the liquidity of other pools are insufficient to acquire the forgone positions. The removal of liquidity (funds withdrawal) would then be complete when the liquidity of each pool is sufficient.

In order to lower the frequency of adding to remove liquidity, a withdrawal fee would be charged. However, there is no lock-up period or time freeze for deposits and withdrawals. Liquidity can be removed upon adding at any time for funds.

Withdrawal fee = 0.1%