Mechanism
Rebalance mechanism
Clovis employs a multi-layered liquidity optimization strategy that operates across all supported chains. The protocol's cross-chain rebalancing mechanism automatically maintains optimal fund distribution across the entire network, while local reserves utilize safety coefficients to ensure sufficient liquidity for emergency withdrawals on each chain.
Within each local reserve, a dedicated allocation coefficient enables the automated investment of idle funds into carefully vetted same-chain protocols to generate passive yields. The protocol implements stringent risk management criteria: investment amounts cannot exceed safe percentage thresholds of target protocols' TVL, all positions maintain immediate liquidity without lock-up periods, and continuous mempool monitoring enables preemptive fund recovery before potential protocol emergencies.
This architecture enables users to deposit into Clovis and automatically receive proportional yields from the entire cross-chain ecosystem, without needing to understand the underlying complexities or track individual chain performance differences. All yields are aggregated across chains and distributed proportionally based on users' fund contributions, creating a unified, hands-off yield generation experience.
Penalty and Incentive program (Embedded in the Rebalance mechanism)
Clovis implements a sophisticated hub-and-spoke architecture that maintains optimal liquidity distribution across multiple chains through dynamic rebalancing mechanisms. The protocol establishes three critical liquidity thresholds: Rmin, Ropt, and Rmax to ensure efficient capital allocation while minimizing bridging costs.
Penalty structure
The system employs a tiered penalty framework that activates when user transactions push spoke chain liquidity ratios below optimal levels. When the post-transaction ratio falls below Ropt, users incur skew penalties calculated using the formula: Penalty = Amount × Alpha × (Ropt - Rpost) ^ Beta, where Alpha & Beta = positive constant.
Penalty severity scales with liquidity imbalance:
Above Ropt: No penalty
Between Rmin and Ropt: Moderate penalty with partial incentive allocation
Below Rmin: Maximum penalty with forced rebalancing
Phased incentive evolution
In the long run, the incentive program operates on a "shortfall-based distribution" model, calculating the exact liquidity deficit as (Ropt - Rpost) × Global TVL. New deposits up to this shortfall amount share the accumulated penalty pool proportionally through automatic airdrops, creating immediate economic incentives for rebalancing behavior.
Risk management
Critical safeguards include forced bridging triggers when ratios breach minimum thresholds, mempool monitoring for protocol security, and manual override capabilities for exceptional circumstances. The system maintains strict bridging cost caps at a specific basis points, ensuring rebalancing operations remain economically viable while preserving user experience through immediate local liquidity access.
Five-step information flow with messaging thresholds
Clovis employs a sophisticated five-step information flow system with multiple messaging thresholds (an N/M multi-threshold consensus model to ensure the safety and reliability of cross-chain asset settlement) to ensure secure and efficient cross-chain operations. This system provides users with real-time updates on transaction progress across different blockchain networks, enhancing transparency and user experience during cross-chain operations
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