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Deposits and Withdrawals
This section provides an overview of how deposits and withdrawals work in Conic Omnipools.
When funds are deposited to or withdrawn from an Omnipool, the Conic UI estimates how much of the LP tokens or underlying will be received. This is done by simulating the deposit or withdrawal transaction and seeing what the received amount would be. The amount received depends on several factors (e.g., which pool is chosen for deposits/withdrawals, how balanced is the underlying Curve pool, or price impact). A slippage limit is then applied to the expected amount to ensure that at least the expected amount of LP tokens (deposit) or underlying (withdrawal) is received.
The expected amount of LP tokens (deposit) or underlying (withdrawal) received depends heavily on price impact. LPs need to understand how price impact works and how a Conic Omnipool selects pools for deposits and withdrawals in order to avoid suffering from negative price impact.
When doing single sided deposits to or withdrawals from Curve pools, users will experience price impact. Similarly, when depositing to or withdrawing from Conic Omnipools, users will still experience this same price impact. Price impact is caused by the state of the Curve pool changing during the deposit or withdrawal, leading to the amount of underlying or LP tokens one receives changing. Usually this price impact is minor (e.g., a fraction of a percent or even zero). However, in some cases this can become high, usually when a stablecoin in the Curve pool one is interacting with has destabilized. If the price impact is high (above
0.1%) a warning will show on the Conic UI to warn the user of this. If one wants to try to reduce their price impact, there are some things one can do. For instance, an option is to try to split the deposit into smaller amounts over a longer period of time. Price impact is higher when the depositing or withdrawing amount is higher, so doing this in smaller batches over time can help. Another option is to wait until the state of the Omnipool or Curve pool changes. The Curve pool may become more balanced which would reduce the price impact.
Users who deposit into Conic Omnipools need to be aware of this price impact and accept the risk that they may incur losses from this.
When users deposit into, or withdraw from, a Conic Omnipool their funds are deposited into, or withdrawn from, Curve pools. Depending on the state of the Curve pools, this can yield positive or negative price impact. As part of the Omnipool design, any negative price impact is passed on to the depositing or withdrawing user. This is so existing LPs are not paying for price impact costs. In addition, any positive price impact is not passed on to the depositing or withdrawing user but is instead passed on to the current Omnipool LPs. This is to prevent certain looping imbalance attacks. From this mechanism, Omnipool LPs gradually earn positive price impact profit during regular deposits, withdrawals, and during each rebalancing period. The yield from positive price impact is realized in the underlying tokens and is included in each Omnipool's base APR.