Lottery Mechanics

What is a ticket?

Tickets are used for the lottery which is a method used to shrink the money supply. Simply, the protocol offers an incentive for users to voluntarily burn their LSD, and in return an amount of tickets 1LSD burned = 1 Ticket. When the money supply grows again, a lottery is held and the ticket holder enters into the lottery. 50 winning tickets are chosen using a random number oracle. Winning tickets get 1 LSD + prize pool / 50 while losing tickets get back 1 LSD.

Example: When TWAP price is below $1, Alex buys 1LSD from market. He burns this LSD and gets 1 Ticket. If the TWAP price goes above $1 (within 60 cycles, and debt is paid off), he is able to redeem his ticket and join the lottery. Winning Tickets are converted to 1LSD + reward (prize pool/50) Losing tickets get back 1 LSD

So losing tickets still earn a profit given that they bought during the <$1 period. So if you bought LSD at $0.70, since we've crossed over to $1 peg, you get back 1 LSD which is worth >=$1

What is the Ticket Validity?

In order to minimize risk for those that help bring the price back up, all tickets are can redeem 1 LSD when TWAP price reaches 1 BUSD. However, tickets that are over 180 cycles are no longer eligible as active tickets in the upcoming lottery pool. This means that the 1 LSD you burn to get a ticket will be redeemable to 1 LSD again even after the 90 cycles as long as price is above 1 BUSD. For example, in cycle 100 Alice bought 100 LSD at 0.70 and burned it to mint 100 LSD tickets. If the first TWAP >1 BUSD happens at cycle 200, the 100 Tickets is no longer eligible to participate in the lottery in cycle 201. But Alice still gets back 100 LSD and still profited 0.30 per LSD since the price at the time of lottery is >1 BUSD.