Minting nTokens

To mint nTokens, a user deposits Cash (cTokens) into the nToken account. The nToken account mints fCash tokens based on the current pool proportions and then distributes the user's liquidity into the underlying liquidity pools for that currency and holds the resultant liquidity tokens representing the nToken account's claim on the user's deposited liquidity.

Here is a detailed flow of minting nTokens:

Minting nTokens in detail

1. You only need Cash to provide liquidity in the Notional liquidity pool. Here Cash can be the underlying currency i.e. DAI, USDC, ETH, etc. The Cash is received by the nToken account.

The nToken account will mint the appropriate amount of fCash for different maturity pools and will distribute the liquidity in those pools at the same proportion (Cash : fCash = current pool proportion). All of the above will be executed automatically by the nToken account.

1. To provide liquidity nToken account needs fCash and to mint fCash, it will need the data of the current pool proportion.

1. Based on the fetched data it would mint the +ve & -ve fCash pair. The minting also takes the deposit shares into account to mint the required fCash.

Deposit shares are percentage figures that tell the nToken account how much of a user's total liquidity to deposit into each individual market.

Context: Mechanics

1. nToken will now allocate the liquidity to all the pools of different maturity subject to the underlying currency. When the liquidity is allocated, the nToken will still be holding the -ve fCash token.

1. Liquidity token representing the liquidity would be acquired by the nToken account.

1. Finally, the user will get the receipt token representing their liquidity, nDAI in our case.