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What influences the price of Squeeth oSQTH?
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ERC20 token of squeeth (ETH²) is called oSQTH, 1 oSQTH is around 1/10000 of squeeth
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1. ETH price movements
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2. Funding rate (In-kind funding)
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3. Implied Volatility
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Prices go up when volatility is high, funding yields go up when volatility is high, market is expecting higher volatility
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Implied Volatility & Funding Rate
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Daily volatility = ± vol / sqrt(365)
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e.g. ± .85 / sqrt(365) = ± 4.4% each day
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IV = sqrt(implied funding * 365)
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Implied funding = ln(currentMark / currentIndex) / funding period
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Where current mark & index are spot from Uniswap
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funding period = 420 hours or 17.5 days
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premium over mark and index is realized over 17.5 days
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funding rate is a reflection of market's expected future volatility
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