---
# System prepended metadata

title: sAVAX Pre-Unstake Pool Feasibility Analysis
tags: [savax, research, benqi]

---

# sAVAX Pre-Unstake Pool Feasibility Analysis

###### tags: `savax` `benqi` `research`

Idea:[discord Lopumbo#0650](https://discord.com/channels/948448386963623986/948449174830063636/1044873922631442452)
## Abstract

**FACT**: Unstake sAVAX gets more AVAX than swap.

Set a pool to pre unstake sAVAX and use the released AVAX for swap.

The pool can provide a better swap rate and liquidity provider can benefit from it.

#### Example: 

Unstake price: $1.06$
Swap price: $1.04$
Price of this pool: $1.05$

Swap user earn $1.05-1.04=0.01$

Liquidity provider earn $1.06-1.05=0.01$


## Analysis

#### Stake AVAX / Unstake sAVAX

Benqi protocol provides AVAX staking.

-   **Stake**

    Stake AVAX for sAVAX. [Stake here.](https://staking.benqi.fi/stake)

    Staking rate is $\frac{AVAX-Total-Supply}{Total-Pooled-AVAX} = 0.9502$ (Nov.29.2022)

-   **Unstake**

    Unstake sAVAX for AVAX. [Unstake here.](https://staking.benqi.fi/unstake)

    Staking rate is $\frac{Total-Pooled-AVAX}{AVAX-Total-Supply} = 1.0524$ (Nov.29.2022)

    **After unstaking, user should wait 15 days(cooldown period) to claim the unstaked AVAX.**

    We notice that in Benqi [docs](https://docs.benqi.fi/benqi-liquid-staking/staking-and-unstaking), it says that sAVAX will still be accuring during the 15 day cooldown period. So we will not suffer any additional loss when unstaking.

#### Swapping AVAX / sAVAX

We use platypus as the price referrence.

-   AVAX --> sAVAX: $0.9534$

-   sAVAX --> AVAX: $1.04616$

#### Comparison

We see a difference of $1-\frac{1.04616}{1.0524}=0.6\%$ between the two methods.

In other words, we will suffer a $0.6\%$ loss when using a swap protocol.

**And this is how this pool makes profit.**

To be more persuasive, we use 90 days data to show this.(calculated every 6 hours)
![](https://i.imgur.com/NtUaXcb.png)

<!-- <img src="./generated/priceDiff.png" width = "900" height = "500" alt="price difference" align=center /> -->

Average: $0.694\%$

Medium: $0.569\%$

Max: $3.974\%$

Min: $0.146\%$

## Design

1. **No sAVAX. All AVAX.**

    This is the basic rule of the pool.
    All sAVAX will be unstaked to AVAX, including liquidity provider's sAVAX and swap users' sAVAX.

    Thus the pool will not provide swapping to sAVAX, only sAVAX --> AVAX.
    
    If liquidity provider want to withdraw, he will have two choices: 
    
    - wait for todays' AVAX unlock
    - penalty for cancel unstake

2. **Swap rate and apy.**

    The swap rate must be lower than unstake rate and higher than swap rate given by other protocols.
    Since the little amount of AVAX will have little influence on the market, we assume that once AVAX unlocked, it will be swapped by users and become sAVAX.

    Assume the swap rate to be $0.35\%$ lower than unstake rate, which is $1.0487$ for now, still higher than swap protocols. Then the profit of the pool should be $0.35\%$ (gas fee not included). $0.3\%$ will be distributed to liquidity providers and $0.05\%$ will be the pool's profit.

    Liquidity provider will enjoy a $0.3\% / 15 * 365 = 7.3\%$ apy.

    If swap rate is 0.2% lower than unstake rate, apy will be $3.65\%$.

    I prefer $0.05\%$ higher than the best swap and promise to be lower than unstake rate. Which will be $0.65\%$ profit on average and $14.6\%$ apy.

#### Bad to Benqi

Kind of encouragement to unstake sAVAX...