OLP token

OLP or Ostium Liquidity Provider token represents the LP share in the LP Market Making Vault.

Minting

LPs deposit USDC into the LP MM Vault. The protocol mints the equivalent number of OLP tokens, at the deposit entry time price, and sends tokens to the same wallet used to deposit. However, if the user deposits with a lockup period, they receive an NFT representing the OLP tokens, which are held in the vault until the lockup period ends and the user unlocks the tokens.

Burning

Once the withdrawal process is completed, the protocol burns OLP tokens and sends the equivalent USDC amount to the LP.

Rewards

The MM Vault accumulates these fees from trading activity (diagram here):

• 30% of protocol opening fee

• 100% of liquidation reward

• 100% of rollover fee if the collateralization ratio is below 100%

By depositing capital into the MM Vault, LPs earn rewards, with fees generated from trading activity. Depositors can estimate their potential earnings through the projected APY displayed on the User Interface or manually derivation through observed protocol flows.

Pricing & Example

Fee flows are compounded directly into the vault, and as a result, any OLP token holdings. Sample flow:

• Alice deposits 100 USDC into the MM Vault at time t, at which time 1 OLP = 1 USDC. She now has 100 OLP in her wallet.

• At time t+1, the value of the MM Vault has grown programmatically as a result of compounding trading and liquidation fees. Now, 1 OLP = 1.10 USDC.

• Alice requests to withdraw from the vault at time t+1, which in practice means burning her 100 OLP and redeeming them for their USDC value.

• Alice receives 110 USDC, effectively posting a gain of 10%. Alice does not lock in her conversion price when she requests a withdrawal; she receives 110 USDC based on the conversion rate at the actual time of withdrawal itself.

APR Calculation

To standardize yield reporting and align with best practices used by leading DEXes, we calculate the Annual Percentage Rate (APR) based on the price change of the OLP over the past 30 days.

$$APR (\%) = 12 \cdot R_{30d} \cdot 100$$

We apply a non-negative floor to ensure the APR only reflects positive performance. This approach is consistent with vault designs that avoid extrapolating or compounding negative returns.

R_30d is the last 30 days' OLP price return:

$$R_{30d} = \dfrac{ P_t - P_{t-30} }{ P_{t-30} }$$

• P_t: OLP price today

• P_t-30: OLP price 30 days ago

This APR represents a forward-looking extrapolation of recent performance, helping users evaluate yield potential based on actual OLP price behavior.