Buying and Selling

Buying

Fees for buying PLP tokens will vary based on which assets the index has less or more of, the Buy PLP token page will show which assets have the lowest fee. Fees will be lower for tokens that the pool has less of.

The PLP tokens holders will keep getting the total-fee rewards.

Selling

Note that there is a minimum holding time of 1 hour after minting before the PLP tokens could be sold.

Rebalancing

The fees to mint PLP tokens, burn PLP tokens or perform swaps will vary based on whether the action improves the balance of assets or reduces it. For example, if the index has a large percentage of $ETH and a small percentage of $USDC, actions which further increase the amount of $ETH the index has will have a high fee while actions which reduce the amount of $ETH the index has will have a low fee.

Token weights are adjusted to help hedge PLP tokens holders based on the open positions of traders. For example, if a lot of traders are long $ETH, then $ETH would have a higher token weight, if a lot of traders are short, then a higher token weight will be given to stablecoins.

If token prices are increasing, then the price of PLP tokens will increase as well, even if a lot of traders have a long position on the platform. The portion reserved for long positions can be treated as stable in terms of its USD value since if prices increase the profits from that portion will be used to pay traders, and if prices decrease, the losses of traders will keep the USD value of the reserve portion the same.

If a lot of traders are short and larger weights are given to stablecoins, then PLP tokens holders would have a synthetic exposure to the tokens being shorted, e.g. if $ETH is being shorted then the price of PLP tokens will decrease, and if the price of $ETH increases then the price of PLP tokens will increase from the losses of the short positions.