PMM Module

On specific blockchains, Lombard Protocol deploys a Private Market Maker (PMM) module smart contract to improve the user experience for acquiring LBTC holders from other popular BTC derived assets.

The PMM smart contract has defined risk parameters to allow for temporary & limited exposure to other BTC-assets, as the super-majority of LBTC is backed by only native BTC.

All deployed PMM smart contracts are listed here.

The smart contract has an optional fee, set based depending on the asset being swapped to LBTC.

Note: The PMM smart contract is operated as a convenience function aimed at onboarding retail users. Any financial market operations (i.e. arbitrage) utilising these contracts is discouraged. Additional security measures will be introduced to restrict access if needed.

Example:

The PMM smart contract deployed on Base to serve cbBTC to LBTC onboarding has the following notable functions:

• remainingStake is the amount of LBTC available to be minted before the PMM is at capacity and no more cbBTC can be swapped to LBTC.

• relativeFee is the percentage of LBTC to be deducted per swap, to cover treasury operational costs to provide this service.

• swapCBBTCToLBTC(uint256 amount) will execute an atomic swap for the amount of cbBTC specified. Note: the PMM smart contract must be authorized to debit the cbBTC amount from the user.

Lombard Protocol has defined risk parameters to limit maximum exposure to cbBTC, as the majority of Lombard's reserves are held in native Bitcoin. This temporary exposure to non-native Bitcoin (i.e. cbBTC), ensures the stability of LBTC.

A Private Market Maker module (PMM) is used to control the exchange of LBTC for cbBTC, ensuring the corresponding underlying BTC is staked safely into Babylon.

Further info can be found on the PMM and LBTC smart contracts here.