Why Flash Unstake?

Addressing Lock-Up Periods

Immediate liquidity is essential for the smooth functioning of Decentralized Applications (dApps). However, usually unstaking processes involve lengthy unbonding periods, such as the 7-day withdrawal delay in EigenLayer, which locks up users' assets and diminishes capital efficiency. InceptionLRT's Flash Unstake feature takes this challenge head-on.

To address this, InceptionLRT users can leverage the Flash Unstake Feature to immediately convert their restaked assets to their original state.

Scenario Analysis

Scenario 1: DEX Stable LPs

Issues Identified:

• Low Swap fees: Transaction fees on Decentralized Exchanges (DEXs) are often minimal, resulting in lower earnings for liquidity providers

• Slippage: Large trades can have a considerable price impact, particularly in less liquid markets, resulting in inefficient trading.

• Partial Reward Participation: In pools matched against ETH, only the liquidity offered by the staked token gets rewards, not the ETH portion.

• Opportunity Cost: Low Swap fees do not offset the opportunity cost of having 100% of tokens earn staking rewards. Liquidity providers may earn more by directly staking their assets.

Conclusion:

• Capital Inefficiency: Low Fees, slippage, and partial reward participation make these pools capital efficient, not justifying the risks and opportunity costs involved.

• Unsustainable Model: Low swap costs do not provide adequate incentives for liquidity providers, making the model unsustainable.

• High Incentivization Costs: Significant incentives are required to attract liquidity, which can be costly to sustain.

Scenario 2: Concentrated Liquidity

Issues Identified:

• Low Swap Fees: Similar to the first scenario, swap fees can be low, affecting Liquidity Providers revenues.

• Slippage: Despite the concentrated liquidity within a specific price range, slippage remains an issue for trades outside these ranges.

• Unpredictability: The percentage of liquidi Staking Tokens (LSTs) or LIquid Restaking Tokens (LRTs) in the pool can be unpredictable, leading to uncertain outcomes for Liquidity Pools.

Conclusion:

• ETH Dominance in LP: Concentrated liquidity pools for LST/LRT tend to be predominantly composed of ETH due to the value deviation of LST/LRT from their underlying assets.

• Primary Market Price (LRT Ratio): LSsT or LRTs are often traded at a discount on DEXs compared to their primary market price set by the protocol. They rarely trade at a premium.

• Ineffective Concentrated LPs: Tokens frequently fall outside of the ideal trading range, rendering concentrated liquidity pools ineffective.

Advantages of Flash Unstake / What It Addresses

The Flash Unstake module provides a structured solution to the issues identified in typical liquidity provision scenarios. Here's what the feature has to offer:

• Immediate Liquidity:

Allows users to bypass conventional unbonding periods, such as Eigenlayer's 7-day withdrawal delay.

• Flexibility:

This feature allows swift portfolio adjustments in response to changing market conditions. Whether reallocating funds to more profitable opportunities or immediately abandoning positions to mitigate risk, the ability to instantly unstake assets gives you a substantial advantage in the dynamic market of Defi.

• Fixed-rate Conversion:

The Flash Unstake feature allows users to convert staked tokens (LST/LRT) without worrying about slippage. Fixed-rate conversions eliminate slippage, resulting in a more predictable and stable experience.

• Predictable Cost of Liquidity:

The cost of liquidity is limited to a maximum of 5% of the Staking Rewards, ensuring that liquidity provision is predictable and manageable. This enables users to plan more successfully

• Scalable Liquidity Provision:

The Flash Unstake feature is meant to scale with the protocol's Total-Locked-Value (TVL), accommodating various levels of demand.