How it works...
Liquidity Providers earn a yield on their deposit in exchange for providing liquidity to allow users to bet.
The smart contracts ecosystem comprises the following:
- House Pools - A house pool contract allows liquidity provider deposits (USDC, BTC & ETH) to bankroll Housebets.io and third-party dApps that integrate LunaFi.
- TreasuryDAO - The DAO wallet store offers cold storage for treasury funds and the distribution of profits to vLFI holders.
- Rewards Contract - Distributes $LFI tokens to players & liquidity providers.
- LFI House Pool - A contract that accepts bets in LFI and serves to secure the protocol. Users receive revenues from $LFI bets + $LFI tokens from the treasury contract in return for securing the protocol.
The above shows a customer E2E experience, data flow and betting entry into the smart contracts via our protocol.
House Pools use community-owned “liquidity pools” to bankroll Housebets. These liquidity pools are permissionless, transparent, and offer LFI rewards to incentivize liquidity providers to keep their tokens locked up in the pool, so winning bets can be paid out. The more tokens provided as liquidity within the ecosystem, the lesser the risk, yield variance, and emissions.
LPs who deposit USDC, BTC, or ETH into house pools provide liquidity for the smart contract. The House Pool’s profit is based on each bet's margin.
The LunaFi protocol prevents the house from accepting bets that cannot be paid. The protocol’s hard-coded rules ensure that the deeper the pool becomes, the bigger the stake can be made, and the greater the rewards to liquidity providers.
Deployed on Polygon
We launched LunaFi on Polygon for a number of reasons:
- 1.The ‘low throughput’ issues of ETH mean the chain can only process 30 transactions a second
- 2.Polygon is a layer-two (L2) scaling platform that leverages the security benefits of ETH as well as its smart contracts while significantly improving the throughput (tx) capacity to 7200 per second with a competitive gas fee
- 1.The primary goal of the pool is to provide liquidity for bets & to make a positive return in the long run by accepting bets that are in favour of the pool.
- 2.When you deposit into the pool, you exchange your assets for liquidity provider "LP" tokens (a share of the pool). The breakdown of the value of an LP token can be found here. You will have exposure to all pending bets & all future bets accepted.
- 3.There needs to be enough liquidity in the pool to payout all the bets in the worst-case scenario. You may not be able to withdraw all of your LP tokens if there isn't enough liquidity in the pool. Liquidity increases when bets settle, or further deposits are made.
- 4.When others exit the pool, you will proportionally take on their exposure of pending bets. You are paid a risk premium for this, as they forgo any positive EV.
- 5.When you decide to leave the pool, you will lose any positive EV 'Expected Value" of pending bets that you accepted whilst in the pool. I.e. this does not apply to any EV that you bought into when you entered the pool.
- 6.The House Pools are rewarded with LFI. This can be immediately claimed.