Atomic Unstaking Pool

The atomic unstaking pool offers instant liquidity—you get your MON immediately instead of waiting through the multi-epoch traditional process. The trade-off: you pay a utilization-based fee.

How It Works

When you use the atomic pool:

1. You burn your shMON tokens
2. The system calculates your share of MON (based on the exchange rate)
3. A fee is calculated based on current pool utilization
4. You receive your MON instantly, minus the fee

No waiting periods, no multi-step process. One transaction, immediate withdrawal.

Understanding the Fee

Atomic unstaking charges a fee that accrues entirely to remaining shMON holders. The fee adjusts dynamically based on current pool utilization:

Utilization = Amount withdrawn so far ÷ Total pool capacity

The fee curve is designed as a simple linear function:

$$\text{Fee Rate} = \text{Base Fee} + (\text{Slope} \times \text{Utilization})$$

At low utilization, fees remain near the base rate. As utilization increases, fees rise proportionally to maintain pool liquidity.

Example Fee Curve

If configured with a 0.005% base fee and a 1.00% slope at full utilization:

• At 0% utilization: Fee = 0.005%
• At 50% utilization: Fee = 0.505%
• At 100% utilization: Fee = 1.005% (capped)

Key point: Fees can never exceed the full fee cap (base + slope), even if utilization temporarily spikes above 100%.

Pool Liquidity Management

The atomic pool maintains a target liquidity level, typically around 1-2% of total protocol equity. Understanding how this liquidity changes helps you time withdrawals:

What Increases Available Liquidity

1. Epoch processing: When epochs roll over and accounting settles, the pool's allocation may increase
2. Atomic withdrawals completing their cycle: After instant withdrawals go through the underlying unstaking process, that capacity gets replenished
3. Revenue allocation: A portion of earned revenue can decrease utilization without changing total allocation

What Decreases Available Liquidity

1. Withdrawals: Each atomic withdrawal reduces available liquidity
2. Target adjustments: If governance lowers the target liquidity percentage
3. Equity decreases: Since target liquidity is a percentage of equity, if equity falls, so does target liquidity

The Revenue Effect

When the protocol earns rewards, those rewards can be used to offset existing utilization.

How it works: The pool tracks a "distributed amount" (how much has been withdrawn) and an "allocated amount" (total pool size). When revenue arrives, it can reduce the distributed amount without requiring actual unstaking.

Effect: Utilization can decrease between epochs purely from earned revenue, making liquidity available faster without waiting for unstake completions.

Note that in periods of high staking rewards or MEV, the pool naturally replenishes faster, keeping fees lower.

Comparing to Traditional Unstaking

Feature	Atomic Pool	Traditional Unstaking
Speed	Instant (one transaction)	4-5 epochs (~22-27 hours)
Fee	Variable (0.1% - 0.5% typical)	Zero
Liquidity Limit	Limited by pool capacity	Unlimited
Best for	Small to medium withdrawals needing speed	Large withdrawals or patient users

When to Use Atomic Unstaking

Choose this method when:

• You need MON immediately
• The fee (given current utilization) is acceptable to you
• Your withdrawal amount is within pool capacity
• Time is more valuable than the fee percentage

Avoid this method when:

• The pool is highly utilized (high fees)
• You're withdrawing a very large amount (may exceed pool capacity)
• You're not in a hurry and want to avoid any fees
• Current utilization shows fees above your acceptable threshold

Note: When utilization is high, comparing the atomic unstaking fee to the spread on decentralized exchanges may reveal more favorable pricing for converting shMON to MON.

Checking Current Conditions

Before using the atomic pool, you should be sure to check:

1. Current utilization: How much of the pool is already in use
2. Fee rate: What fee you'll pay at current utilization
3. Available liquidity: How much can be withdrawn before hitting the limit