Liquidity Provider Onboarding

Overview

Liquidity providers (LPs) are the core participants in the flow.lease protocol. They supply WAVES tokens into the leasing pool, which are automatically distributed to validators based on DAO voting. In return, LPs receive:

  • fWAVES tokens representing their proportional share of the pool.

  • Continuous accumulation of validator rewards.

  • The ability to initiate withdrawals at any time (subject to protocol withdrawal mechanics).

All LP operations are fully decentralized, transparent, and executed on-chain via smart contracts.

Key Concepts

fWAVES Token

  • fWAVES is the liquidity token minted upon deposit.

  • fWAVES balance represents your share in the total pool value.

  • The value of fWAVES grows over time as validator rewards accumulate.

  • fWAVES is non-rebasing: value increases indirectly through protocol-controlled calculations.

Cycles

  • flow.lease operates in defined leasing cycles.

  • Deposits and withdrawals are processed cycle-by-cycle to prevent manipulation and ensure fair distribution of rewards.

  • Each cycle lasts a fixed number of blocks, defined in the smart contract.

Reward Distribution

  • Validators periodically send their accumulated rewards back to the protocol.

  • Rewards are automatically included in the pool value and reflected in fWAVES pricing.

  • LPs receive WAVES tokens depending on their share in the total pool.

Liquidity Provider Workflow

Step 1: Deposit WAVES

  • You deposit WAVES into the smart contract.

  • In exchange, you receive freshly minted fWAVES tokens representing your share.

  • Deposits are only included into leasing operations after the current cycle ends.

  • The deposit process may be performed via:

    • Official frontend interface.

    • Direct smart contract call to deposit().

Example Deposit Flow

Action
Outcome

You deposit 1000 WAVES

You receive approximately 1000 fWAVES

Admin fee is deducted (if applicable)

You receive fWAVES - fee

Note: Initial fWAVES ratio may differ slightly depending on current pool state.

Step 2: Accumulate Rewards

  • As validators generate rewards and transfer them back to the protocol, the pool value increases.

  • The amount of WAVES and other tokens backing each fWAVES token grows.

  • Your fWAVES balance remains constant but represents a growing underlying value.

  • Rewards are reflected automatically without any additional action required from LPs.

Step 3: Withdraw

Withdrawals are a two-step process due to cycle-based rebalancing:

3.1 Submit Withdrawal Request

  • You initiate a withdrawal request by submitting your fWAVES tokens to the contract (requestWithdraw()).

  • The contract locks your request and calculates your equivalent WAVES value based on the current pool state.

  • The request is queued for processing after the cycle ends.

3.2 Process Withdrawal

  • Once the current cycle completes, your withdrawal can be processed via processWithdraw().

  • Your locked WAVES are transferred back to your address.

  • The corresponding fWAVES are burned.

Example Withdrawal Flow

Action
Outcome

You submit withdrawal for 500 fWAVES

fWAVES locked, WAVES amount calculated

Cycle ends

Withdrawal becomes available for processing

Withdrawal processed

WAVES transferred, fWAVES burned

Withdrawals are fully transparent and visible on-chain throughout the entire process.

Optional: Cancel Withdrawal

  • You may revoke a pending withdrawal request (before processing) via revokeWithdraw().

  • Your fWAVES are returned, and you remain fully active in the pool.

Additional Concepts

APR Calculation

  • The protocol calculates estimated APRs based on the previous 7-day period.

  • APR values are updated automatically and displayed via API and the frontend interface.

  • Rewards depend directly on validator performance and leasing allocations.

Auto-Rebalancing

  • After each voting cycle, WAVES leasing is automatically redistributed to validators based on updated DAO votes.

  • LPs do not need to manage or delegate staking manually.

DAO Voting Impact

  • The allocation of your deposited WAVES to validators depends on DAO voting outcomes.

  • LPs do not vote directly.

  • FLOW token holders perform voting to select validators.

Risks and Responsibilities

  • Deposits are handled entirely via smart contracts without custody by any third party.

  • The flow.lease protocol includes slashing mechanisms for validator misconduct, but validator performance remains a variable risk factor.

  • LP rewards are proportional to pool performance and validator compliance.

  • System logic is fully transparent, deterministic, and publicly auditable.

API & Transparency

  • Complete real-time pool and validator data is available via public REST API.

  • LPs may monitor:

    • Current pool balances.

    • APR estimations.

    • Cycle status.

    • Historical deposits, withdrawals, and reward distributions.

  • Full on-chain data may be independently verified via blockchain explorers.

Example Frontend Interactions

Action
Available via Web UI
Available via Smart Contract

Deposit WAVES

Yes

deposit()

Request Withdraw

Yes

requestWithdraw()

Process Withdraw

Yes

processWithdraw()

Revoke Withdraw

Yes

revokeWithdraw()

Monitor APR

Yes

via REST API

Summary

Liquidity providers:

  • Deposit WAVES and receive fWAVES tokens.

  • Accumulate validator rewards automatically.

  • Withdraw at any time following the cycle-based schedule.

  • Benefit from fully automated leasing rebalancing and DAO governance.

  • Operate in a 100% decentralized, non-custodial, transparent environment.

PreviousValidator onboarding

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