How PoEL Works

The PoEL Flow

1. Liquidity Provision: Users deposit assets into DeFi application liquidity pools

2. LP Token Receipt: Users receive LP tokens representing their share in the pool

3. Collateral Deposit: LP tokens are deposited into PoEL protocol as collateral

4. SUPRA Borrowing: Users borrow native SUPRA tokens based on collateralization ratio

5. Automatic Staking: Borrowed SUPRA is automatically delegated to validators

6. Dual Rewards: Users earn both liquidity provision fees AND staking rewards

Key Mechanisms

Dynamic Collateralization

The protocol dynamically adjusts collateralization rates based on:

• Asset risk profiles and volatility

• Market conditions and liquidity depth

• Protocol utilization and demand

• Portfolio diversification requirements

Tenure-Based Incentives

Longer locking periods receive enhanced rewards through a sigmoid function:

Capital Efficiency Tracking

The protocol continuously monitors and optimizes for capital efficiency: