Withdrawal Fee
Withdrawal Arbitrage” is able to drain fund from the pool and is harmful to the protocol’s long term financial health. To counter the attacks, there is a custom withdrawal fees mechanism.
In most cases, however, a very small withdrawal fee is already sufficient to prevent such an attack.
Assume the withdrawal amount is equal to 1% of the pool:
| Cov Ratio | Withdrawal Fee |
|---|---|
>= 1 | -0.0000% |
0.9 | -0.0011% |
0.8 | -0.0093% |
0.7 | -0.0518% |
0.6 | -0.2731% |
You can learn more about withdrawal arbitrage and the design on withdrawal fee here.
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