Debt

At Polynomial chain, Liquidity layers is the counter party for the derivative applications. sometimes it can also make loses and accure debt for the liquidity layer. This debt is total pool debt, which is distributed according to the share of the users deposits. you can think of a CDP (Collateralized Debt Position).

Skew or poor market performance can cause an increase in debt.

• In the initial weeks after launch, debt levels may fluctuate due to trader performance and market conditions.

• As open interest caps are raised, arbitrageurs are expected to step in and balance any market skew, helping to neutralize its impact on debt.

Payback the debt

To withdraw liquidity from the pool, you must first pay off any outstanding debt. This debt must be bridged to the Polynomial chain to complete the repayment. Note that debt won’t reduce from your staked amount; you need to bridge additional funds to the Polynomial chain to settle the debt. Once the debt is paid, you can unstake from the pool. There’s a 24-hour waiting period before you can withdraw your funds. After this period, you can return to the platform, withdraw, and bridge your funds using the official method.

You can check the withdrawal flow here.