Dip Accumulator
The Dip Accumulator: Maximize Your Gains While Rebalancing the USDN Protocol
The Dip Accumulator is a unique and innovative feature designed to maximize users’ gains while stabilizing the USDN Protocol. This tool allows you to automatically enter the Protocol during market dips while playing a key role in maintaining a balanced state in the event of massive liquidations.
Maximize Your Gains with the Dip Accumulator
The Dip Accumulator offers a simple and automated solution for investing in Long positions. Instead of constantly monitoring the market, you deposit your assets into a smart contract. This contract is triggered when an imbalance is detected in the Protocol following liquidations.
The Dip Accumulator then steps in to take advantage of moments when the price of the underlying asset is low, opening Long positions and capturing entry opportunities at favorable prices. This maximizes your chances of profit while also benefiting from redistributed liquidation fees (bonus).
Why Use the Dip Accumulator?
Effortless "Buy the Dip": The Dip Accumulator is automatically triggered when liquidations cause an imbalance in the Protocol. This means it buys when the asset price is low, maximizing your chances of profit.
Boosted Yields (APR): In addition to purchasing at attractive prices, you benefit from a boosted APR thanks to liquidation fees redistributed to Dip Accumulator participants. These fees come from the liquidation of other Long positions.
Reduced Fees: Long Positions opened via the Dip Accumulator have no entry fees. This makes this method much more cost-effective than opening a Long position manually, as fees are only paid upon closing a position.
How the Dip Accumulator Works for the User
Depositing Funds into the Dip Accumulator: Users can deposit their assets into the Dip Accumulator. The funds remain in a "holding pool" until the Dip Accumulator is triggered. The deposit process involves two steps to protect the Protocol from front-running:
Initiate: You start by initiating the deposit and committing an amount of assets to the pool.
Validate: Next, you must validate the operation after a delay of 24 seconds. If you do not validate within 20 minutes of initiation, your funds will be temporarily locked for 3 hours and 40 minutes. After this period, you can withdraw the entirety of your funds.
Activation During an Imbalance: The Dip Accumulator is triggered only when an imbalance of 6% or more is reached following a liquidation. At that moment, it uses the funds in the holding pool to open a Long position with a maximum leverage of 3x, aiming to bring the imbalance down to 4%. This enables the Protocol to take advantage of low prices and opportunities created by a market in imbalance while minimizing the risk of liquidation for the Dip Accumulator position.
Withdrawing Funds: As long as your funds remain in the holding pool, you can withdraw them at any time. However, once the Dip Accumulator has used your funds to open a Long position, you must wait at least 4 hours and until the imbalance is reduced below 3.5% before you can exit the Protocol. Your withdrawal will only be possible if it does not create a new imbalance in the Protocol, as this would compromise the effectiveness of the Dip Accumulator and its rebalancing function.
The Dip Accumulator and Liquidation Price: Like any leveraged Long position, the Dip Accumulator also has a liquidation price when it opens a position. If market conditions evolve unfavorably, the position may be liquidated, but this risk is managed automatically by the Protocol.
The Role of the Dip Accumulator in Rebalancing the Protocol
The Dip Accumulator is crucial for stabilizing the USDN Protocol by preventing prolonged imbalances following significant price crashes. When massive liquidations lead to an imbalance over 6%, the Protocol risks negative Funding Rates, which would reduce the yield of USDN holders. The Vault could pay Funding Fees to the Longs for an extended period, which would gradually reduce the value of USDN. The Dip Accumulator steps in to restore balance by adjusting the Long Trading Exposure relative to the USDN Vault balance.
Rebalancing Positions: When the Protocol detects an imbalance of 6% or more following a liquidation, the Dip Accumulator uses available funds to open a leveraged Long position, bringing the gap down to a target level of 4% or as much as possible with the available funds. This stabilizes the Protocol quickly and prevents the imbalance from persisting, which could otherwise impact the value of USDN.
Maintaining Equilibrium: Once activated, the Dip Accumulator holds its position until a new imbalance of 6% occurs, ensuring the continued stability of the Protocol. If later liquidations create an imbalance again, the existing Dip Accumulator position is increased in size with the new pending assets from the holding pool, and its leverage is adjusted to reach the target imbalance.
Summary
The Dip Accumulator is a powerful and innovative tool that allows users to automatically "buy the dip" during asset price drops while maximizing yields through redistributed liquidation fees and reduced position fees. It also plays a crucial role in stabilizing the USDN Protocol by rebalancing the system during significant imbalances, protecting the value of USDN.
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