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# System prepended metadata

title: Hyperdrive LP Withdrawals

---

# Hyperdrive LP Withdrawals

## What profit do LPs make from longs?

1. Ike the initial LP puts up $1000 and the share price, c_0, is 1.
2. Larry the long buys 1000 PTs for $960 at c_0, so z_0 = 960.
3. Time passes. c_1 = 1.05.
4. Larry closes at redemption, so we gets $1000 = 1.05 * ~952 shares. z_1 = 952.

```
ike_pnl = c_0 * z_0 - c_1 * z_1 + (c_1 - c_0) * z_0 = 960 - 1000 + 0.05 * 960 = $8
        = c_0 * z_0 - c_1 * z_1 + c_1 * z_0 - c_0 * z_0 = c_1 * (z_0 - z_1)
```

## What happens if Larry doesn't close?

This is good for LPs because they get variable interest on his 960 shares. It's bad for them because LPs that are in the withdrawal pool have to wait for him to close to get paid.

Obvious solution is to add a keeper that closes Larry. But we can do better... we add an agent called Pete the poker who can allocate the longs pnl once the long has matured without closing the long.

## What are the mechanics of the withdrawal pool?

There are two withdrawal pools. The long pool and the short pool. An LP that is withdrawing get withdrawal tokens minted equal to `longs_outstanding * (delta_lp / lp)` and `shorts_outstanding * (delta_lp / lp)`.

Obvious solution is that there are two global pools where all withdrawal token proceeds go. But we can do better... we can use tranches.

### Tranches By Time

- must be closed temporally and by amount

TODO

## Who are the good zombies and who are the bad zombies?

### Longs are good zombies... but they can be bad

Naively, zombie PTs are always good because LPs get a free source of variable interest. They are bad when it effects LP withdrawal timelines. Poking solves this.

### Shorts are bad zombies... but they can be good

If Sally holds her shorts, she's receiving variable interest on a large amount of capital in perpetuity. But we can do better... we can allow pokers to lock in her returns (this is like finalizing a term in V2) without closing her position. This way LPs make variable interest on the PT amount and Sally's margin amount (which they didn't prior to finalization).

### LPs in the withdrawal pool are bad zombies... but they can be good

Instead of putting shares in the withdrawal pool, we put base. That way LPs that haven't started withdrawing get to keep the variable interest.