Liquidity Provisioning for Derivatives

Dynamo provides liquidity through a decentralized liquidity provisioning protocol built on the BNB Chain. Dynamo allows users to stake their assets as collateral to mint synthetic assets. These synthetic assets are used as liquidity for permissionless derivatives such as perpetual futures, options, and parimutuel markets across EVM chains.

Through Dynamo's decentralized liquidity provisioning protocol, users can stake their assets as collateral to mint synthetic assets. These synthetic assets serve as liquidity for the permissionless derivatives offered by Dynamo. By staking their assets, users contribute to the liquidity pool, enabling the seamless trading and exchange of these synthetic assets without the need for traditional counterparties

When a user mints synthetic assets by locking their assets as collateral, the system issues debt shares to track the staker's debt amount. These debt shares represent the user's proportional ownership of the total debt pool. For example, if Alice and Bob each mint 100 dUSD, they would both own 50% of the debt shares.

The debt pool fluctuates based on the value of the assets locked as collateral. If the value of the debt pool increases, the debt shares are used to calculate how much debt the user owes. For example, if the debt pool doubles, Alice, who owns 50% of the debt shares, will owe 200 dUSD.