Skip to main content

Protocol Owned Surplus House

Introduction​

The "Protocol Owned Surplus House" smart contract is a strategic component of the Azos protocol, designed to enhance the protocol's liquidity management and value retention. Replacing the traditional Surplus Auction House, this smart contract provides a direct mechanism for supplying ZAI and AZOS token liquidity to decentralized exchanges (DEXs). It achieves this through the use of "Adapter Contracts," which facilitate seamless integration with various DEX platforms. This approach is designed to mitigate value leakage and ensure that the protocol directly benefits from its own surplus liquidity, aligning with its long-term sustainability and growth objectives.

Key Methods​

provideLiquidity(address adapterContract, uint256 amountZAI, uint256 amountAZOS)​

  • Description: Supplies liquidity to a specified decentralized exchange through an adapter contract. This method can be used for either ZAI or AZOS tokens.
  • Parameters:
    • adapterContract: The address of the adapter contract that facilitates interaction with the target DEX.
    • amountZAI: The amount of tokens (ZAI or AZOS) to supply as liquidity.
    • amountAZOS: The amount of tokens (ZAI or AZOS) to supply as liquidity.
  • Requirements:
    • The caller must have sufficient permissions, restricted to the smart contract's administrators or the protocol governance mechanism.

removeLiquidity(address adapterContract, uint256 amountLP, address token)​

  • Description: Withdraws liquidity from a decentralized exchange, reversing the action taken by provideLiquidity.
  • Parameters:
    • adapterContract: The address of the adapter contract associated with the target DEX from which liquidity will be removed.
    • amountLP: An identifier or amount representing the liquidity position to be withdrawn.
    • token: The address of the LP token being withdrawn from liquidity.
  • Requirements:
    • The caller must have the necessary permissions, similar to provideLiquidity.

registerAdapter(address adapterContract)​

  • Description: Registers a new adapter contract, enabling it to interact with the Protocol Owned Surplus House for liquidity provision.
  • Parameters:
    • adapterContract: The address of the new adapter contract to be registered.
  • Requirements:
    • Only callable by smart contract administrators or through protocol governance mechanisms.

deregisterAdapter(address adapterContract)​

  • Description: Removes an adapter contract from the list of approved adapters, preventing further interaction with the Protocol Owned Surplus House.
  • Parameters:
    • adapterContract: The address of the adapter contract to be deregistered.
  • Requirements:
    • Similar to registerAdapter, restricted to administrators or governance actions.

Key Mechanisms and Concepts​

Adapter Contracts​

Adapter contracts are external smart contracts that provide a standardized interface for the Protocol Owned Surplus House to interact with different decentralized exchanges. Each adapter is designed to handle the specific requirements and call patterns of its target DEX, allowing for flexible and secure liquidity provision across the ecosystem.

Liquidity Provision and Removal​

The core functionality of the Protocol Owned Surplus House involves supplying liquidity to DEXs (via provideLiquidity) and withdrawing it (via removeLiquidity). These actions are crucial for maintaining optimal liquidity levels, ensuring the protocol's tokens remain accessible for trading while optimizing the financial benefits to the protocol itself.

Protocol Value Retention​

By directly managing its surplus through liquidity provisions, the Protocol Owned Surplus House prevents value leakage that might occur through traditional surplus auctions. This approach aligns the interests of the protocol with those of its participants, ensuring that surplus value is reinvested to support the protocol's growth and stability.

Governance Integration​

The registration and deregistration of adapter contracts (registerAdapter and deregisterAdapter) are governed by the protocol's administrative mechanisms. This integration ensures that only vetted and approved adapters can be used, maintaining the security and integrity of the protocol's operations.

The Protocol Owned Surplus House represents a forward-thinking approach to liquidity management within the Azos protocol. It reduces dependency on external liquidity providers over time. By leveraging adapter contracts for direct integration with DEXs, the protocol enhances its autonomy and financial robustness, securing its position within the decentralized finance ecosystem.