Function Refinement Tree

This document breaks down the high-level functions of the ParityTax system into more detailed sub-functions and the services they rely on.

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JIT Liquidity Taxation

Description: Enforce taxes on JIT liquidity providers during swaps via hook logic.

Services:

• UniswapV4 Hooks

Sub-functions

• Calculate JIT Tax

  • Description: Compute tax rate based on position duration, trade size, and market impact.

• Apply Tax in Swap Hooks

  • Description: Deduct tax during beforeSwap/afterSwap and allocate to the redistribution pool.

  • Services:

    • Hook.beforeSwap

    • Hook.afterSwap

    • Hook.afterSwapReturnDelta

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PLP Reward Redistribution

Description: Distribute taxed JIT revenue to passive LPs post-removal.

Services:

• UniswapV4 Hooks

Sub-functions

• Track PLP Contributions

  • Description: Record liquidity depth and duration for each PLP position.

  • Services:

    • PoolManager.liquidityLedger

• Redistribute on Removal

  • Description: Allocate rewards proportionally in the afterRemoveLiquidity hook.

  • Services:

    • Hook.afterRemoveLiquidity

  • Sub-functions:

    • Calculate PLP Shares

      • Description: Weight rewards by (liquidity × duration) / totalEligibleLiquidity.

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Time-Locked Liquidity Manager

Description: Enforce deadlines for JIT liquidity positions.

Services:

• UniswapV4 Hooks

Sub-functions

• Validate Position Expiry

  • Description: Check if block.timestamp exceeds the LP-specified deadline.

  • Services:

    • Hook.beforeModifyPosition

• Expire JIT Positions

  • Description: Automatically remove liquidity if the deadline has passed.

  • Services:

    • PoolManager.removeLiquidity

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Dynamic Incentive Calibration

Description: Adjust tax/redistribution parameters in real-time.

Services:

• UniswapV4 Hooks

Sub-functions

• Monitor JIT/PLP Ratios

  • Description: Track liquidity participation metrics on-chain.

  • Services:

    • PoolManager.liquiditySnapshot

• Update Tax Parameters

  • Description: Modify rates via governance or algorithmic feedback.

  • Services:

    • GovernanceModule

  • Sub-functions:

    • Apply Control Theory

      • Description: Use a PID controller to stabilize the JIT/PLP equilibrium.