How it works
Protocol Mechanics
The Split Mechanism
Plether converts USDC collateral into two synthetic tokens representing opposing dollar positions:
Deposit: 2 USDC → 1 plDXY-BEAR + 1 plDXY-BULL
Redeem: 1 plDXY-BEAR + 1 plDXY-BULL → 2 USDC
This ratio never changes. Whether the dollar is strong or weak, you always mint and redeem at 2:1:1.
BEAR vs BULL
plDXY-BEAR profits when the US dollar weakens against major world currencies. If you believe the dollar will decline due to inflation, fiscal policy, or global shifts away from USD, BEAR is your position.
plDXY-BULL profits when the US dollar strengthens. If you expect dollar dominance to continue or flight-to-safety flows into USD, BULL is your position.
The two tokens are zero-sum: every dollar BEAR gains, BULL loses, and vice versa. Their combined redemption value always equals $2.00 (the protocol CAP).
The Oracle Basket
Plether tracks the dollar's strength using a weighted basket of six major currencies:
Euro (EUR)
Japanese Yen (JPY)
British Pound (GBP)
Canadian Dollar (CAD)
Swedish Krona (SEK)
Swiss Franc (CHF)
The weighting mirrors the US Dollar Index (DXY). When the basket price rises, it means foreign currencies are worth more in dollar terms—the dollar has weakened.
USD weakens → Basket rises → BEAR redemption value increases
USD strengthens → Basket falls → BULL redemption value increases
Price Discovery
plDXY-BEAR trades against USDC on Curve. There is no native BULL pool—instead, users acquire BULL by minting pairs and selling the BEAR, or by using the Zap feature.
Market prices stay close to redemption values through arbitrage. If BEAR trades below its redemption value, arbitrageurs buy cheap BEAR, pair it with BULL, and redeem for USDC profit. This buying pressure pushes the price back up.
Yield Generation
USDC collateral doesn't sit idle. The protocol deploys 90% to Morpho lending markets to generate yield, keeping 10% liquid for redemptions.
Yield is distributed as follows:
20% → Protocol treasury
80% → Staking rewards
The Reward Flywheel
Staking rewards are allocated through a self-correcting mechanism that pushes market prices toward their theoretical values.
When rewards are distributed, the contract compares each token's market price (Curve EMA) against its oracle-derived theoretical price. Whichever token is underperforming receives a larger share of rewards.
This creates a flywheel:
Token trades below the theoretical value
Its stakers receive outsized rewards
Higher yields attract more stakers
Increased demand pushes price toward equilibrium
System rebalances
The result: yield generation naturally corrects price deviations, reducing the work required from arbitrageurs and keeping markets efficient.
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