Wlp overview

WLP (WaterX Liquidity Provider) is WaterX's liquidity pool token. Deposit USDC or USDsui to mint WLP and earn trading fee revenue.

How It Works

WaterX uses a single liquidity pool model. WLP holders collectively serve as the counterparty for all traders:

• Traders lose → WLP pool profits (pool value rises)

• Traders win → WLP pool loses (pool value drops)

WLP's value is determined by the pool's NAV (Net Asset Value):

Pool Total Value = (USDC + USDsui) Balance + Unrealized PnL (mark-to-market)
NAV per WLP = Pool Total Value / WLP Outstanding

When traders are collectively losing, Pool Total Value rises and each WLP is worth more. The reverse is also true.

Revenue Sources

WLP holders earn the following fee revenue, auto-compounded into the pool:

Fee Type	WLP Share	Description
Trading Fee	70%	Fee on each open / close
Borrow Fee	70%	Hourly fee paid by position holders
Funding Fee	100%	Net amount flows to LP
Liquidation Fee	Remaining collateral − Insurance	Leftover collateral from liquidations

All fees auto-compound — no manual claiming needed. WLP's NAV continuously increases with fee accumulation (assuming traders are not collectively profiting significantly).

Risks

WLP is not risk-free yield. Key risks include:

Trader PnL Exposure: The core risk of WLP. If traders collectively profit significantly, the WLP pool value decreases. Historically, most perp traders are net losers over time, but short-term periods of significant trader profits can occur.

ADL Threshold: When LP unrealized losses exceed 30% of WLP TVL, the system activates ADL, force-closing some profitable trader positions to protect LPs.

Utilization Risk: When pool utilization (OI / LP pool value) is high, withdrawals may be restricted. Utilization above 80% blocks new redeem requests.

Oracle Risk: Price deviations may temporarily affect NAV calculations. WaterX uses Pyth and Supra dual oracle sources with aggregated pricing, plus oracle risk controls.

WLP's value can decrease. Before providing liquidity, make sure you understand the risk of trader PnL exposure.

WLP holders earn 70% of trading and borrow fees but bear the counterparty risk of trader PnL. Suitable for users willing to accept market risk in exchange for steady fee income.