The basic mechanics
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Last updated
Deposited user's tokens are routed to LYF protocol, creating user's share in chamber. LYF positions and obligations are associated with chamber, while user recieves tokens, that represent his share of strategy fund.
Plain pseudo-delta-neutral (PDN) position is opened. Chamber tracks it's ID, amounts of assets and obligations associated with it. In the example position 100 USDC used to open PDN-position.
After some time (30 days) and, most important, price change (+20%). Amounts in AMM pool change, so changes total exposure of position. Total SOL in pool is 4.54, total exposure is 0.6, hedge deviation here is 0.6/4.54*100% = 13%. If hedge deviation is higher than chamber's rebalance threshold, rebalance operation is performed.
In this case, chamber extracted 11 USDC from 1'st sub-position, repayed 3.3 USDC of debt and transferred 7.7 USDC to 2'nd sub-position, borrowing repaying 1.2 SOL there while although decreasing pool value of 2'nd sub-position. After that, total exposure is 0 again.
