CEX/Exchanges

RFV price floor redemptions and future protocol features will incentivize the main pool's inclusion as a main factor in future price discovery.

Upwards CEX Price Divergence

This will effect the main pool positively.

The main pool price follows the exchange price upwards when the $LILY in the main pool is bought at a discount and then be sold on the CEX at a premium by arbitragers.

Order Volume ETH is left in the main pool and taken from the CEX.

Downwards Divergence

Above floor price, the main pool follows the CEX if the relative volume overpowers the arbitragers.

Anyone selling BELOW floor on an exchange is a malfunctioning bot.

This situation is no different than if someone were to sell that amount at floor and exit like a regular trader. The net ETH goes to the arbitrager and the $LILY is redeemed at floor price. The price going below floor on a CEX/Exchange leads to arbitragers utilizing the main pool to offload discounted CEX tokens

Since we have an impenetrable floor, the exchange's price will quickly be brought back back to floor peg via RFV arbitrage bots.

Exchanges do not provide floor price exit liquidity.

This is similar to how USDT has redemptions through their reserve backing.