xLPT (Staked LP Tokens)

Staked LPT Collateral Type Support

xLPT (thala_staked_lpt) is Thala Labs’ evolution on LPT (Liquidity Pool Tokens).

xLPT assets accomplish four goals:

1. yield bearing: whoever holds xLPT is eligible for rewards

2. boosted: whoever holds xLPT, if equipped with veTHL, is eligible for boosted rewards

3. transferrable: xLPT can be traded on dex and sent to other accounts.

4. composable: xLPT can be used as collaterals in Echelon market

Echelon Market natively integrates with Thala xLPT assets to facilitate the composability functionality of this asset class.

Composability

Thala xLPT holders can deposit their xLPT in appropriate Echelon markets. At time of writing, only xLPT supplies will be supported.

By supplying xLPT, users are able to compound their xLPT returns — as they capture both supply interest paid to Echelon depositors, as well as rewards accrued to the Thala xLPT’s underlying liquidity pool.

Rewards

Thala xLPT rewards will be retroactively issued in accordance with standard Echelon reward epochs. The rewards accrued from xLPT depositors in the previous epoch will be paid out to the next epoch’s depositors.

To better understand the composability of the Echelon xLPT reward ecosystem, consider the following example:

• Assume Alice has 100 USDC & 100 USDT

• Alice deposits 100 USDC & 100 USDT into the Thala USDC/USDT pool. Alice receives 100 USDC/USDT LPT

• Alice stakes her 100 USDC/USDT LPT and receives 100 USDC/USDT xLPT.

  • Alice is now earning Thala Incentives via her 100 USDC/USDT xLPT holdings

• Alice supplies her 100 USDC/USDT xLPT into the Echelon USDC/USDT xLPT market.

  • Alice now receives her Thala xLPT incentives via Echelon during the next Echelon reward epoch.

  • Alice also receives Echelon supply APY & Echelon xLPT incentive APY in addition to her Thala xLPT incentives.

• By maximizing xLPT composability, Alice has constructed a strategy earning yield via multiple avenues.

Reward Claims

xLPT rewards accrue via farming epochs set up by the Echelon team. Reward claims for xLPT holders are made available via echelon.market

xLPT Pricing

Given LP token pricing is sensitive, and a semi common exploit vector in other DeFi protocols, only stable xLPT pairs will be supported by Echelon at this time.

To minimize risk in these environments, xLPT pricing utilizes the following equation:

xlpt_price = min(asset_1_spot_price / f, asset_2_spot_price / f) * D / LPT_Supply

where divisor f is added to each asset before passing the asset’s spot price into the stable pool LPT pricing equation

This equation can be intuitively understood as “pricing the xLPT as the minimum price of all composite assets”. This is done for protection against oracle manipulation attacks - where an unjust increase in xLPT value can result in unwanted borrow risk being added to the protocol.

In addition, the divisor f "downscales" each asset price to a more time-normalized value before the asset is passed into the stable pricing equation.

For example:

• Consider a USDC/sUSDE pool where price_USDC = $1, and price_sUSDE = $1.15. In this case, f would start as a constant $1. D / LPT_Supply is also a roughly constant term. In this setting, xlpt price would be:

xlpt_price = min(asset_1_spot_price / f, asset_2_spot_price / f) * D / LPT_Supply
xlpt_price = min(1/1, 1.15/1) * 1 = $1

• If sUSDe for example were to grow to $1.50, Thala may increase sUSDE’s f downscaling factor to $1.45 to better capture de-pegs.

xLPT Circuit Breakers

xLPT Circuit Breakers are introduced as a mechanism to prevent xLPT’s from becoming overinflated in value (and for depositors to borrow more against the asset than they should).

A set of price bands are developed by the Echelon team to prevent incorrect prices from being exploited in the xLPT oracle.

When xLPT pricing falls outside of designated price bands xLPT functionality will circuit break (returning a broken state and “pausing” market capabilities like withdraw/borrow/etc.). While a circuit breaker is triggered, no actions that decrease user health factors will be supported.

Circuit breakers will be reviewed & adjusted by the Echelon team on a regular cadence.

xLPT Rate Limits

Standard Echelon borrow/withdraw rate limits similarly apply to xLPT markets.

In addition to these rate limits, Thala rate limits apply to xLPT depositors. Once a user withdraws xLPT from echelon, they are subject to Thala rate limits for unstaking/liquidity removal.