DA-06 · LESSON 06

LP revenue share

KEY DEFINITIONS

Terms used in this lesson

LP: Liquidity provider: a participant supplying capital under a defined risk-and-revenue arrangement.

LP returns require a versioned formula for eligible revenue, allocation weights, utilization, capital, duration, and losses; absent commercial inputs remain unknown.

45 min Difficulty 5/5 Not started

VISUAL MODEL

See the whole mechanism before going step by step

Use the diagrams to orient yourself. Then the guided explanation below teaches every part in depth.

4 explanatory views

CONCEPT-SPECIFIC MAP · ducat vaultA Ducat action moves one Bitcoin-anchored vault state to a successorSelect any state to inspect its exact role.

RELATIONSHIP MAPInputs, rule, and outputs

01
PREDECESSORCurrent vault outpoint
The current Bitcoin output anchors collateral and identifies the state being spent.
02
REQUESTLP revenue share
The LP revenue share workflow proposes one exact action and successor state.
03
POLICYProfile, oracle, signatures
Applicable policy, price evidence, authorization, and transaction shape are checked.
04
BITCOIN SPENDScript-valid transaction
Bitcoin miners and nodes can include only a transaction that satisfies Bitcoin rules.
05
SUCCESSORNew outpoint and state
Ducat validators reconstruct debt, collateral, token, and account changes from the confirmed transaction.

Rule shown: Bitcoin checks the spend; Ducat components independently reconstruct and validate the additional protocol state.

STAGE 1 OF 5PREDECESSOR: Current vault outpoint

The current Bitcoin output anchors collateral and identifies the state being spent.

Governing relationship: Bitcoin checks the spend; Ducat components independently reconstruct and validate the additional protocol state. Complete path: 1. PREDECESSOR, Current vault outpoint. The current Bitcoin output anchors collateral and identifies the state being spent. 2. REQUEST, LP revenue share. The LP revenue share workflow proposes one exact action and successor state. 3. POLICY, Profile, oracle, signatures. Applicable policy, price evidence, authorization, and transaction shape are checked. 4. BITCOIN SPEND, Script-valid transaction. Bitcoin miners and nodes can include only a transaction that satisfies Bitcoin rules. 5. SUCCESSOR, New outpoint and state. Ducat validators reconstruct debt, collateral, token, and account changes from the confirmed transaction.

1. State transitionWhat exists, what changes, and what results

BEFORE

For teaching only, assume eligible period revenue R = $100,000, one LP weight wi = 20, total weight W = 100, direct LP costs = $2,000, realized losses = $3,000, and average c…

MECHANISM

List included fees, spreads, liquidation flows, reserve income, and exclusions without double counting.

AFTER

The arithmetic is reproducible, but none of these values or the allocation rule is established as Ducat's current commercial agreement.

Text equivalent: Starting from For teaching only, assume eligible period revenue R = $100,000, one LP weight wi = 20, total weight W = 100, direct LP costs = $2,000, realized losses = $3,000, and average capital = $500,000. The mechanism begins when List included fees, spreads, liquidation flows, reserve income, and exclusions without double counting. The resulting lesson is The arithmetic is reproducible, but none of these values or the allocation rule is established as Ducat's current commercial agreement.

2. Mechanism pathSelect a stage to inspect its job

STAGE 1 OF 4

Define eligible revenue

List included fees, spreads, liquidation flows, reserve income, and exclusions without double counting.

Complete path: 1. Define eligible revenue: List included fees, spreads, liquidation flows, reserve income, and exclusions without double counting. 2. Define allocation weights: Specify whether weight depends on contributed capital, utilization, duration, risk tier, or another versioned rule. 3. Calculate gross share: Multiply eligible revenue by the LP's allocation fraction for the same period and units. 4. Calculate net return: Subtract losses, costs, idle capital effects, and timing adjustments, then divide by average capital for a period return.

3. Rule and failure boundaryWhat accepts the result and where it can stop

ACCEPTED PATH

The worked case executes the named inputs and checks in the displayed order. Subtract losses, costs, idle capital effects, and timing adjustments, then divide by average capital for a period return.

CHANGED CONDITION

A missing, malformed, stale, unauthorized, or inconsistent required input stops at its first named boundary. A fee rate, revenue pool, allocation fraction, capital base, period, utilization, and losses are different variables and require a defined agreement.

Important distinction: LP share equals the protocol fee percentage times deposited capital. A fee rate, revenue pool, allocation fraction, capital base, period, utilization, and losses are different variables and require a defined agreement.

Text equivalent: The accepted path is enforced by The worked case executes the named inputs and checks in the displayed order. Subtract losses, costs, idle capital effects, and timing adjustments, then divide by average capital for a period return. If the required condition changes, A missing, malformed, stale, unauthorized, or inconsistent required input stops at its first named boundary. A fee rate, revenue pool, allocation fraction, capital base, period, utilization, and losses are different variables and require a defined agreement.

Loading lesson visuals...

Learn the idea

A liquidity provider, or LP, supplies capital under a commercial agreement. LP revenue share requires a defined pool of eligible revenue, an allocation rule, each LP's weight, time basis, losses, and capital denominator. Those commercial inputs are not established by protocol code alone.

GUIDED EXPLANATION1/4 ideas inspected

Define eligible revenue

List included fees, spreads, liquidation flows, reserve income, and exclusions without double counting.

The worked example follows the explanation

Inspect every idea above to open it.

Important distinction“LP share equals the protocol fee percentage times deposited capital.”

A fee rate, revenue pool, allocation fraction, capital base, period, utilization, and losses are different variables and require a defined agreement.

FINISH LEARNING FIRST

The questions unlock after every required learning activity

Inspect every guided idea, open the worked example, rebuild its mechanism, and complete the deterministic lesson tool. Your progress is saved automatically.