🔐Protection Mechanics
Oasis introduces sophisticated protection mechanisms to safeguard liquidity providers against common DeFi risks. This guide explains how these protections work and how they benefit your position.
About Oasis Protection Incentives
The impermanent loss protection offered by Oasis is not magical - Hathor Labs fund it as part of their strategic initiative to grow the Hathor ecosystem. This protection mechanism represents a deliberate investment by Hathor Labs to incentivize liquidity growth and build trust in the ecosystem. By providing this security to liquidity providers, Hathor aims to foster the development of more DeFi services and increase the utility of the HTR token across the network. This approach allows early liquidity providers to participate with reduced risk while the network builds sustainable trading volume and depth.
Understanding Impermanent Loss Protection
What is Impermanent Loss?
Impermanent Loss (IL) occurs in liquidity pools when the relative price of paired tokens changes. In traditional liquidity pools, this can result in having less value than if you had held your tokens.
How Oasis Protects You
Oasis provides comprehensive protection against impermanent loss through full protection up to 4x price divergence, with protection payments made in HTR tokens. The protection is automatically calculated at withdrawal, and users do not need to take any action.
Protection Coverage
For price divergence up to 4x, 100% of impermanent loss is covered with protection paid in HTR tokens. There is no reduction in deposit value, and the calculation happens automatically when you withdraw.
How Protection Works
For hUSDC Pools
When HTR Price Increases
Your original hUSDC deposit remains fully protected. No impermanent loss occurs, so you keep your full deposit value and benefit from any HTR bonus appreciation.
When the HTR Price Decreases
For decreases up to 4x, your hUSDC value is fully protected, and compensation is paid in HTR.
Protection Scenarios
When both prices move:
Protection is based on the relative change, with the 4x limit applied to the price ratio. Complete protection is maintained within this range.
When prices move differently:
The protection adjusts automatically and considers the net value impact to maintain fair protection. Trading fees supplement this protection.
Position Closing Implementation
Oasis uses a two-step position closing process to protect users from slippage:
Close Position: Removes liquidity from the pool and calculates final token amounts
Withdraw Funds: Transfers previously calculated and stored token amounts to the user
This approach ensures you receive exactly the token amounts calculated at position closing, regardless of any transactions between closing and withdrawing.
Protection in Practice
Monitoring Protection
The interface shows your position value, potential withdrawal amounts, protection status, and available HTR compensation.
Protection Calculation Example
For a 1000 hUSDC deposit:
HTR decreases by 50%:
Full protection applies
Receive additional HTR to maintain value
Original hUSDC value preserved
HTR decreases by 75%:
Still within 4x protection range
Full compensation in HTR
Value maintained at 1000 hUSDC
Understanding the Simulation Tool
Using the Tool
Click "Simulate Gains" and adjust the price change sliders for the token price to view its impact on returns. You can observe two scenarios: hold bonus (yellow line) and Sell Bonus (green line).
Reading the Chart
The x-axis shows the HTR price change percentage, while the y-axis shows the return percentage. The yellow line represents the total return when holding the bonus, and the green line shows the return when selling the bonus immediately. The protection impact is visible in negative price zones.
💡 Tip: Use the simulation tool to understand how protection works under different market conditions.
Protection and Bonus Interaction
Independent Systems
Protection applies to the position, while bonus tokens are managed separately. Your protection remains unaffected by your bonus strategy, allowing you to choose your bonus strategy independently.
Strategy Considerations
Hold Bonus Strategy:
With this strategy, your position remains protected while your bonus is exposed to HTR price, offering potential upside capture with no impact on protection.
Sell Bonus Strategy:
This approach lets you lock in immediate value while protecting your position. You'll have reduced market exposure, but your protection remains unchanged.
Common Questions
When does protection apply?
Protection is active throughout the lock period and calculated at withdrawal. The application is automatic and requires no user action.
How is protection paid?
Protection is always paid in HTR tokens, calculated automatically, and included in the withdrawal amount. The Dozer interface displays this.
Does protection expire?
Protection remains active until your position is withdrawn with no expiration date. You must withdraw to claim protection, which will be preserved even if you delay your withdrawal.
How do I withdraw my funds?
To withdraw your funds:
Wait for your position to unlock (based on the time lock)
Call the
close_positionfunction to define your withdrawal amountsCall the
user_withdrawfunction to receive your tokens
Next Steps
Review technical implementation in Technical Details
Learn about position management in Position Management
Last updated
Was this helpful?