Overview of Velix LSD Mechanism
Overview of Velix LSD Mechanism
Mint: Users mint veMetis with their Metis tokens, which are then delegated to high-performance sequencers for network validation and consensus.
LSD Issuance (veMETIS): Users stake veMETIS for sveMetis, a proof of their staked veMetis accruing rewards, ensuring users maintain liquidity.
Reward Distribution: Rewards are distributed to sveMetis holders, offering a return based on the amount held.
Detailed Technical Overview
Node Locking Pool on Layer 1: Users submit their METIS tokens into the Sequencer Node Locking Pool on Ethereum (Layer 1). This pool is crucial for ensuring the security and proper sequencing of transactions.
METIS Bridging: Tokens are then transferred from Metis Andromeda (Layer 2) to Layer 1 and vice versa through the Metis Bridge. This specialized bridge facilitates the secure transfer of METIS tokens between the two layers.
Interaction with veMETIS Contract and veMETIS Minter Contract: Users submit their METIS tokens to the veMETIS Minter Contract to mint veMETIS, which represents a vested interest in the platform with additional governance rights and potential yield. The veMETIS minter contract is responsible for converting submitted METIS into veMETIS. This step is fundamental for users to participate in the reward system on Layer 2.
Reward Distributor Contract and Protocol Treasury: A Reward Distributor Contract manages the flow of rewards, channeling 10% of veMetis to the Protocol Treasury, which acts as the financial backbone of the Metis ecosystem.
sveMetis Vault: The sveMetis Vault on Layer 2 secures the 90% of veMETIS of rewards accumulated from the staked amount. This mechanism provides an incentive for users who participate in the staking by depositing their veMETIS in return for sveMETIS.
User Actions on Layer 2: On Layer 2, users have the option to stake their veMETIS to receive sveMETIS or unstake sveMETIS to get back to veMETIS.
Receiving METIS after the Challenge Period: Users start generating rewards after 7 days of bridging challenge off of their staked tokens. This period is likely a security measure to verify the correctness of Layer 2 transactions before finalizing them on Layer 1.
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