Claim Settlement
Trader and LPs who suspect MEV like front-running can initiate a claim for a trade.
Eligibility:
For Traders: Traders on Dextr can activate MEV insurance by staking DXTR tokens. The coverage remains valid as long as the DXTR is staked. These staked tokens are fully refundable and can be withdrawn at any time. A minimum stake of USD 100 worth of DXTR is required to enable insurance coverage.
For Liquidity Providers: LPs are automatically insured by default for the total value locked in their liquidity positions. No staking of DXTR tokens is required to receive this coverage.
Coverage Multiplier:
Defines the ratio between the value of staked DXTR tokens and the insurance coverage limit. It determines the maximum order value per trade that is insured under the insurance policy.
Currently set at a 2X multiplier, this means that for every dollar’s worth of DXTR tokens staked, up to 2X the order value per single trade is covered by insurance. This multiplier is subject to change based on governance outcomes.
Order Size Insured:
This represents the maximum order value eligible for MEV loss compensation, determined by the staked DXTR tokens and the coverage multiplier. While this defines the compensation baseline, the actual claim amount might exceed the Order Size Insured if substantial price changes occur before the claim is settled.
Claim Entitlement:
For Traders:
Scenario 1: Filled Orders in case of front-running at the quoted price with No loss
The compensation is set at a fixed rate of 0.1% of the Order Size Insured for the trade they would have settled if front-running had not occurred.
Scenario 2: Open, Partially Filled, and Cancelled Orders:
Opportunity Loss; in this case, Claim Value is calculated based on:
Quoted Price: The price set by the trader for their limit order.
Settlement Price: This is the current oracle price at which the claim is settled.
Insured Value: The maximum order value eligible for coverage, accounting for the unfilled order quantity in cases of partially filled orders and capped at the Insured Order Size.
For Liquidity Providers
The compensation is set at a fixed rate of 0.1% of the Order Size Insured for the trade they would have settled if front-running had not occurred.
Claims Process:
Raise Challenge A 24-hour challenge window begins at 00:00 UTC for transactions executed in the previous 24 hours. During this period, anyone can challenge the transaction by submitting transaction hash or order ID of the order they want to challenge.
zk Proof Generation
The challenged transaction hash/order Id is evaluated through a zk co-processor using historical on-chain data to determine the validity of the challenge. A zk proof is generated to validate the claim raised by the user.
Claim Calculation
User(s) whose claim(s) are validated with a zk proof will become eligible for compensation. The compensation amount is based on the claim entitlement, and it will be settled at the end of the challenge window.
Slashing The total compensation amount is recovered from various sources as follows:
a) The operator who settles the trade on-chain will be penalized by an amount equal to the claim entitlement to discourage MEV practices.
b) If the operator’s stake doesn’t cover the full claim entitlement, the remaining amount will be covered by slashing from an underwriter pool (5%) and the insurance pool (95%).
Claim Settlement
Post slashing, Claim entitlement is transferred to the respective user as follows:
For LPs: The claim amount is transferred at the end of the challenge period automatically.
For Traders:
Scenario1: In case of Filled orders
The trader can claim the compensation within 24 hours from the generation of the zk proof However, if the trader fails to claim the compensation within 24hrs, the compensation will be rejected.
Scenario 2: Open, Partially Filled, and Cancelled Orders
The trader will need to deposit the sell token as per the limit order into the smart contract within 24hr from the end of the challenge period. The Smart contract will then automatically transfer the buy token along-with the slashed amount as per total claim entitlement.
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