Reserve Bucket

When a user bonds in, the initial principal amount + yield generated from the bonded principal is directed to the reserve bucket and in return the users claims their virtual balance of lcdETH and forfeit the ETH which they had deposited for creating the bond.

The total supply of lcdETH is backed by the total amount of ETH in the Reserve Bucket.

Liquidity in the Reserve Bucket is used to allocate liquidity to LSD/ETH pools on curve based on an auction for liquidity. DAOs/Protocols/Whales or other aligned parties get to rent this liquidity.

This bucket is implemented as ERC4626 Vault to allow liquidity allocation strategies to be plugged in and out. ETH coming in the form of bond ins are allocated to these pools in an optimal ratio to bring the final ratio closest to the target ratio decided by the market.

Lucidly pbLSD will deploy an off-chain solver model to find the optimal ratio to allocate new liquidity to align with the voted upon target ratio.