Overview of Velix LSD Mechanism

Overview of Velix LSD Mechanism

1. LSD Issuance (veMETIS): Users stake METIS for veMetis, a proof of their staked METIS accruing rewards, ensuring users maintain liquidity.

2. Reward Distribution: Rewards are distributed to veMETIS holders, offering a return based on the amount held.

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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 the vault: Users submit their METIS tokens to the vault Contract to get veMETIS, which represents a vested interest in the platform with additional governance rights and potential yield. The vault 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.

User Actions on Layer 2: On Layer 2, users have the option to stake their METIS to receive veMETIS or unstake veMETIS to get back to METIS.

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.