Catalyst Overview
Catalyst protocol enables an ecosystem where three main actors can participate:
· Minter
· Liquidity Provider
· Trader
These roles interact via Catalyst's two types of tokens. cAssets, which provide price exposure to the respective market, and Lyst tokens which are an incentive for providing liquidity and allow holders to vote on proposals
A minter is a user that deposits collateral into the protocol to obtain newly minted cAssets. Catalyst accepts Matic tokens(for now) as collateral, and a 150% collateralization ratio (set by governance) must be maintained to avoid liquidation.
Minters can withdraw collateral as long as the collateralization ratio remains above the minimum. The ratio can be adjusted by burning cAssets or by depositing more collateral.
A minter can choose to take a short position on a given cAsset by selling through an AMM or provide liquidity to the newly minted cAsset market and earn rewards as a Liquidity Provider.
Liquidity Provider
A liquidity provider adds an equal amount of cAssets and Matic to the corresponding pool, which increases liquidity for that market. This process rewards the liquidity provider with newly minted Lyst tokens, representing the liquidity provider's share in the pool.
Lyst tokens are used to vote in the governance protocol or added to the Lyst farm to earn more Lyst rewards.
Liquidity Providers are trade facilitators; the assets they allocate to the respective pools enable trading.
A trader engages in the buying and selling of cAssets on AMM exchanges and benefits from price exposure to NFT markets via cAssets.
Last modified 4mo ago
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