Functional Components

Mint

By tokenizing asset certificates, tokens will be minted into two types of certificates, dOT and dYT. DOT represents the ownership of the locked asset certificate to generate a new underlying asset. DYT represents the future rate of return for the same period.

Swap

The marketplace allows the exchange of dYT and USDC to maximize revenue and improve capital efficiency. The exchange function uses order book and AMM's Blend Mode.

AMM: The transactions between both parties of AMM are interacting with liquidity pool on the chain. The liquidity pool allows users to swap tokens on the chain in a fully decentralized and non-custodial manner. Meanwhile, liquidity providers receive earnings in dYT and in transaction fees. Transaction fees are based on the percentage of their contribution to the pool. In a way, the AMM model helps liquidity provider to avoid theta attenuation.

Liquidity

The liquidity pool is an important balancing section of the Dank Protocol and is also a risky pool. Users invest in dYT and USDC to form the pool. As an LP, users invest with USDC or dYT, or both at the same time to earn LP tokens as return. The funds are provided to ensure enough liquidity.

You can provide liquidity to the fund pool and get rewards in the form of LP tokens. As an early-stage liquidity provider that helps improve liquidity, you will become the important stakeholders in the overall protocol. Furthermore, the income from LP mortgage will be proportional to the number of LP tokens you put in and the total number of LP tokens. Unless you continue to provide liquidity, your holdings amount, and income of corresponding reward will gradually be diluted.

Redeem

The holder of the principal token (dOT), can redeem the locked underlying asset at any time, as long as the following conditions are met:

• To redeem the underlying asset after the expiration date, only dOT is required.

• To redeem the underlying asset before the expiration date, equal amounts of dOT and dYT are required.

Expired contracts can be extended term forwardly.