# 3.3 Swap & Staking Product Mechanics

This section covers "what users actually click and what non-linear dynamics occur inside the protocol at that time."

While sections 3.1–3.2 structurally described DOR's supply, synthetic yield layer, parametric governance, risk buffer, and incentives, this section focuses on how they are materialized into swap/staking products and why that structure converts meme market volatility into DOR cash flow.

#### 3.3.1 Capital Divergence: 30% Staking (Deposit Staking) / 70% Swap Capital

All meme assets flowing into the DOR protocol from external wallets are not thrown into a single pool at the point of entry.

The value of inflows is first converted to DOR standards and then diverges bi-directionally into a 30% / 70% structure.

* ① 30% Section: Deposit Staking (DS)
  * 30% of the inflow value is automatically incorporated into DS.
  * Example Parameters:
    * Deposit Period: 12-month fixed lock-up.
    * Interest Rate: 5% APR (Simple Interest).
    * Payment Currency: Both principal and interest in DOR.
    * Release Method: Full lock-up for 12 months, then released in 10% monthly installments for 10 months starting from the 13th month (100% release over 10 splits).
* ② 70% Section: Swap & Operation Capital (HLP Inclusion)
  * The remaining 70% is injected into HLP (Hierarchical Liquidity Pool) as swap and operation capital.

This capital serves as fuel driving Liquidity-Contributing Swaps, Farming Swaps, External Staking/Operation, and the Downside-driven swap kernel.

From an accounting perspective:

* The 30% incorporated into DS is recorded as DOR staking debt to be repaid at a future point.
* The 70% is recognized as operating capital generating short-term volatility returns.

Because these two layers move simultaneously, DOR's swap/staking products have a hybrid structure of "Long-term Lock-up (DS) + Short-term Volatility Yield (Swap/Operation)" from the design stage.

#### 3.3.2 Downside-driven Swap Kernel and Inverse Correlation Demand

<figure><img src="/files/uzOP9h7h3FpLv7X1DHWp" alt=""><figcaption></figcaption></figure>

DOR's swap participation is not a simple asset exchange but presumes an inverse correlation structure (Downside-driven demand) where swap demand grows as prices drop.

Key variables for each time point are defined as follows:

* Relative Drop vs Reference Price x\_t
  * A 10% drop relative to reference price means x\_t = -0.10.
* Market Liquidity (Depth) v\_t
  * The actual volume executable at a specific price level.
* Swap Inflow Demand D\_t
  * The magnitude of swap demand entering the DOR protocol at that point.

Swap inflow demand D\_t is designed to intuitively have the following properties

* Demand increases as drop magnitude increases
  * As x\_t becomes more negative (= drops more), D\_t increases.
* Response expands as market liquidity shallows
  * As v\_t gets smaller (= shallower external market depth), D\_t is designed to react more strongly to the same drop.
* Saturation in extreme drops
  * A saturation parameter (buffer parameter) is set so demand does not spike infinitely in excessive drop sections, making the D\_t increase curve moderate.

At this time, external market circulation C\_t changes according to swap inflow as follows:

* ΔC\_t = - k · D\_t
  * k is a constant between 0 and 1 (0 < k < 1).
  * Represents the ratio of how much swap inflow actually reduces external circulation.
  * Interpreted as "Net Circulation Reduction Rate" including net effects from bridge movements, arbitrage, etc..

In summary:

* Larger drop → Increased swap inflow into DOR
* Decreased meme circulation remaining in external market.

As a result, additional downward pressure is moderated, and prices are buffered in certain sections.

Under this structure, short-term drops in the meme market are reinterpreted not as "risk" but as an "inlet absorbing meme assets in low-price zones.".

* Downturn: DOR protocol acts as a buyer absorbing memes in bulk.
* Upturn: Switches to a seller role, gradually redistributing previously secured meme assets.

On this dynamic, DOR's swap kernel is close to a structure implementing traditional finance's "Buy the Dip" strategy at an automated AMM level.\
It makes market drops themselves act as a protocol-level low-point buying trigger, rather than relying on human judgment.

#### 3.3.3 Swap Types: Liquidity Contributing vs. Farming

<figure><img src="/files/ZbOdk7jNDlliKVj1Kodp" alt=""><figcaption></figcaption></figure>

On this Downside-driven kernel, swap products exposed to users are classified into two types.

* Liquidity Contributing Swap (Liquidity-Contributing Swap)
  * Direction: MEME → DOR
  * Users deposit external meme coins and receive DOR containing "locked release portion + accumulated interest."
  * Part of the DOR locked in the Treasury is released and moves to the user's wallet. In this process, generated contribution fees and interest partially recirculate back to the Staking Pool and DAO Treasury.

Result: Forms a capital circulation loop where External Meme Inflow → DOR Circulation Activation, Gradual Release of Long-term Locked Assets, and DS/DAO Pool Recharge occur simultaneously.

* Farming Swap (Yield-Farming Swap)
  * Direction: DOR <> MEME
  * Users inject DOR to pursue short-term round-based yield and receive returns immediately in meme coins.
  * The entire injected DOR principal is reallocated to the HLP/LP pool, deepening pool depth and mitigating slippage.
  * Users can participate up to 4 times a day. The interest rate structure for each round takes the form of a micro-step function:
    * 1st Round: DOR → MEME, +0.14375%
    * 2nd Round: MEME → DOR, +0.43125%
    * 3rd Round: DOR → MEME, +0.14375%
    * 4th Round: MEME → DOR, +0.43125% (Success probability p\_4=0.2 applied; Rounds 1\~3 always execute, Round 4 is probabilistic).

Sum of MEME → DOR Sections: 0.43125% \times 2 = 0.8625%. Sum of DOR → MEME Sections: 0.14375% times 2 = 0.2875% (Based on fixed schedule before 4th round probability application. Actual daily feel depends on 4th round success.).

Users accumulate daily profits by repeating "3\~4 small-scale farmings in short intervals," while the protocol gains the structural benefit of "continuous DOR → LP inflow.".

#### 3.3.4 Contribution Fees and Distribution Mechanism: 0.8625% vs 0.2875%

Contribution fees generated from swaps are asymmetric depending on direction, designed to treat inflow into DOR and outflow from DOR differently.

(1) MEME → DOR: 0.8625% Contribution Fee

A nominal 0.8625% fee is charged on Liquidity Contributing Swaps converting meme assets to DOR. This fee is distributed internally as follows:

* Total Fee: 0.8625%

  * Staking Pool: 21% (Incorporated into DS and long-term liquidity provider reward pools).
  * User Reward (Direct): 49% (Attributed to swap participants, referrals, Season Quests, etc.).
  * DAO Treasury: 20% (Protocol treasury share used for infrastructure, oracle, audit, R\&D, risk buffer).
  * Burn: 10% (Directly burned to form DOR's structural deflation channel).<br>

  In short, the 1% contribution in the MEME → DOR section is split into a vector of Staking 21% / User Profit 49% / DAO 20% / Burn 10%, a multi-channel structure implementing Participant Reward + Long-term Liquidity + Protocol Finance + Deflation simultaneously.

(2) DOR → MEME: 0.2875% Contribution Fee

Conversely, a nominal 0.2875% fee is charged on Farming Swaps converting DOR to memes.

This fee rate is set relatively low to keep necessary liquidity exits open while preventing "excessive escape" in the DOR → MEME direction.

The 0.2875% is distributed internally as follows:

* Total Fee: 0.2875%
  * User Reward (Direct): 48%
    * Pool returning directly to users as farming bonuses, exit incentives, events.
    * Paid in the respective meme
  * Staking Pool: 20% (Exchanged to DOR and staked)
    * Combined with MEME → DOR direction, used for DS/LP capital accumulation.
  * DAO Treasury: 32%
    * Exchanged to DOR, transferred to DAO, then burned.
    * DAO share to cover risk in outflow sections.

In summary, in the DOR → MEME section, fees are distributed as User Reward 48% / Staking 20% / DAO 32%, creating a "controlled exit + re-entry incentive" structure that thickens DAO and staking pools even at the exit while returning a portion to users.

#### 3.3.5 Expected Yield and Dynamics (Update)

Farming swaps operate based on a maximum of 4 participations per day. Rounds 1-3 always execute, while Round 4 is weighted with a 0.2 (20%) success probability.

Assuming the 4th round succeeds, the micro-step yield per round is:

<figure><img src="/files/E49YdMHNezyTifkvI4y7" alt=""><figcaption></figcaption></figure>

* 1st Round: +0.43125% (MEME → DOR)
* 2nd Round: +0.14375% (DOR → MEME)
* 3rd Round: +0.43125% (MEME → DOR)
* 4th Round: +0.14375% × 0.2 (Success case; Expected value +0.02875%)

Therefore, the total daily expected yield (gross) is 0.43125% + 0.14375% + 0.43125% + 0.014375% approx +1.15%.\
Applying the distribution rule (User 49% / Staking 21% / DAO 20% / Burn 10%), the expected user share (daily) becomes 1.15% times 49% approx +0.5635%.<br>

Of course, this is a model expectation, not a fixed guaranteed yield. Actual realized yield varies based on: ① actual daily participation count, ② market volatility levels, ③ contribution fees/bands/weights automatically adjusted by the stabilization coefficient (Sigma Surf), and ④ actual success/failure frequency of the 4th round.\
The key point is how micro-profits generated from short-term volatility accumulate and redistribute across the DOR stack (Staking, DAO, Burn, LP Deepening), and this design presumes this circulation.

#### 3.3.6 Summary of Structural Virtuous Cycle & Tokenomics Connection

Viewing Liquidity Contributing Swaps and Farming Swaps as a single dynamic creates the following structural virtuous cycle:

* Downturn:
  * MEME → DOR Swaps increase (1% fee structure active).
  * External circulation decreases (ΔCₜ < 0) + DOR·DS·DAO·Burn channels strengthened.
* Upturn:
  * DOR → MEME Farming participation (0.25% fee structure active).
  * Re-circulation of secured memes + Reinforcement of DAO/Staking resources.

Combining the Downside-driven Inflow Function defined in 2.4.2 with the Round-based Farming Mechanics here completes a mechanism that "absorbs memes during downturns and disperses them during upturns, returning the arbitrage and yield to DOR-based cashflows.".

In conclusion, DOR Tokenomics aims to convert the inherent volatility of the meme market into sustainable cash flows attributed to DOR holders through fixed supply and performance-linked vesting, a synthetic yield/liquidity layer on a single DOR settlement unit, parametric governance with Treasury/IRP risk buffers, and a composable incentive layer of referrals, staking, and in-app items.


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