Liquidity Mechanism

Liquidity is fundamental to ensuring that users can always redeem aUSD for the value of their deposited assets. To achieve this, Sumplus implements a multi-layered liquidity guarantee system.

Reserve Margin Pools

• For each supported asset (USDT, USDC, USD1, SUI, WBTC, WETH), Sumplus maintains an independent reserve margin pool.

• Each pool has a defined RESERVES_TARGET_RATE, currently set at 20%.

• The absolute size of each pool’s reserve therefore adjusts dynamically as the AUM (Assets Under Management) of each token changes.

This ensures that a baseline level of liquidity is always preserved for redemptions.

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Dynamic Redemption Fees

• The actual RESERVES_RATE (current reserves vs. AUM) determines redemption costs:

  • When the actual rate falls significantly below the target rate, redemption fees increase. This signals that liquidity is tight and discourages excessive withdrawals.

  • When the actual rate is above the target rate, redemption fees decrease, encouraging normal activity.

• In parallel, the system automatically rebalances asset-side positions and withdraws funds back into the reserve pools to restore healthy liquidity levels.

This mechanism aligns user incentives with system stability while ensuring that liquidity buffers remain intact.

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Secondary Market Liquidity

In addition to reserve pools, Sumplus enhances liquidity through exchange integrations:

• DEX Partnerships: Collaborating with top liquidity venues (e.g., Cetus) to create trading pairs between aUSD and underlying assets.

• Liquidity Incentives: Providing rewards to liquidity providers, ensuring deep order books and efficient swaps.

• User Benefits: Even if reserve pools are temporarily tight, users can access liquidity through these secondary markets at competitive spreads.