cross-chain-pmm-lps/docs/04-bot-policy.md

Bot Policy (What It Actually Does)

Inputs (per pool)

• Oracle price P_oracle(T) — target peg: 1.00 for USD stables; FX for EUR tokens
• Pool mid price P_pool(T)
• Deviation: δ = (P_pool - P_oracle) / P_oracle
• Inventory imbalance on cW side (how much of your token remains vs baseline)
• Public chain liquidity/volatility conditions
• Bridge backlog / mint-burn queue status (if available)

Actions

1. Tight-peg maintenance trades

• If P_pool(T) > P_oracle + band → bot sells T into pool (adds T inventory / absorbs quote)
• If P_pool(T) < P_oracle - band → bot buys T from pool (removes T inventory / spends quote)

2. Inventory re-centering

• If pool is “too drained” of T (or too full), bot adjusts by:
  • Adding/removing single-sided liquidity on T side
  • Optionally bridging more T from ChainID 138 or redeeming back

3. Cross-pool routing

When multiple quotes exist (USDT/USDC/DAI), the bot routes to the best edge:

• Trade where slippage + fee is lowest
• Optionally rebalance quote asset via existing DEX routes (USDC ↔ USDT ↔ DAI)

4. Bridge-aware throttling

• If the bridge is congested or risk flags trip, bot widens bands / reduces exposure

Peg bands

See ../config/peg-bands.json and 05-oracles.md. Summary:

• USD-pegged: Normal ±10–25 bps; stress ±50–150 bps; circuit break >2%
• EUR-pegged: Normal ±25–50 bps; stress ±100–250 bps; anchor via EURUSD oracle

State machine and pseudo-code: ../spec/bot-state-machine.md, ../spec/bot-pseudo-code.md.