System Reserve
Primary source of assets used to make Liquidity Providers whole
The system reserve represents the primary source of assets to be paid out to make LPs whole.
As a result of collateralization, the system will have a surplus of both ETH/Stablecoins and the initially supported assets in its PCA. These will be utilized in internal swaps (with e.g. assets from the operational surplus) if a loss occurs.
First, the reserve is used to make LPs whole, followed by using veOLIVE staked to that Jars. As an ultimate backstop, ETH or stablecoins can be drawn from the reserve, in case an internal swap for the asset in deficit is not possible. This scenario should not occur unless incorrect guardrails are put in place for the deployment, or a relative price change larger than mitigated by the guardrails occurs.
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