Settlement Mechanism

Structured LSD differs from other leverage protocols in that it does not include a liquidation mechanism. Instead, the protocol offers periodic and ad hoc settlement mechanisms, which allow $ULSD and $ETHy holders to receive profits and rebalance the leverage rate.

Periodic settlement is preset in the protocol and is triggered when the price of the underlying asset at the time of the initial split of the mother fund rises or falls by more than 45%. Ad hoc settlement is carried out through community governance, where a majority of investors must agree that the protocol should distribute profits.