Liquidity Bin Value

Liquidity Bin Value and CLB Token Value

As previously mentioned, the 72 liquidity bins have individual bin values. When liquidity is provided to a bin and CLB tokens are minted, the total token value at that moment is equal to the bin value.

The CLB token value and the liquidity bin value can vary depending on the utilization of the bin by takers. However, the CLB token value does not change due to makers’ liquidity deposits or withdrawals.

The liquidity provider supplies liquidity based on the current CLB token value, and the CLB tokens are minted. For example, let's consider the +0.03% liquidity bin in the USDC-ETH/USD market, which currently has 11,000 USDC bin value, and a total of 10,000 CLB tokens have been issued, with a current CLB token Value of 1.10 USDC.

If Alice adds an additional 1,000 USDC liquidity:

• Alice will receive 909.0909 CLB tokens, equivalent to 1,000 USDC, based on the CLB token Value of 1.10 USDC.

• The bin value of the liquidity bin will increase from 11,000 USDC to 12,000 USDC.

• The total issued CLB tokens will be 10,909.0909.

• The value of CLB tokens will remain unchanged at 1.10 USDC.

Each individual liquidity bin's CLB token value starts at 1.00 settlement token (e.g., if the settlement token is USDC, it starts at 1.00 USDC) when the initial liquidity is supplied. This value then fluctuates based on the cumulative results of executed contracts based on the price of current oracle round, including PnL (realized and unrealized), trading fees, and interest, specific to each individual bin.

As mentioned earlier, the CLB token value of each liquidity bin moves independently based on the trading activity within the bin (realized PnL, unrealized PnL, trading fees, and interest). The CLB tokens in Chromatic Protocol are ERC-1155 tokens and are designed for auto-compounding.

How to calculate the value of my CLB tokens

To calculate the value of CLB tokens,

If the status of Alice’s CLB tokens is as follows:

• USDC - ETH/USD +0.01% LP Bin: 1,000 CLB, CLB Token Value 1.10

• USDC - ETH/USD +0.02% LP Bin: 1,500 CLB, CLB Token Value 1.20

The total number of CLB tokens Alice holds is 2,500 CLB.

The total value of CLB tokens is calculated as follows:

• (1,000 * 1.10) + (1,500 * 1.20) = 2,900 USDC.

Therefore, the total value of Alice’s CLB tokens is 2,900 USDC.