A proportional exit allows liquidity providers to withdraw from a pool by receiving all constituent tokens in the same ratio as the pool's current composition. This exit method avoids swap fees and price impact, making it the most capital-efficient withdrawal mechanism.

How Proportional Exit Works

1Pool State:
2- 100 ETH (50%)
3- 200,000 USDC (50%)
4- Total LP tokens: 10,000
5
6User Exit: 1,000 LP tokens (10% of supply)
7
8Proportional Exit Receives:
9- 10 ETH (10% of 100)
10- 20,000 USDC (10% of 200,000)

Proportional vs Single-Asset Exit

Implementation

1function proportionalExit(uint256 lpAmount) external {
2    uint256 totalSupply = lpToken.totalSupply();
3    
4    for (uint i = 0; i < tokens.length; i++) {
5        uint256 tokenBalance = tokens[i].balanceOf(address(this));
6        uint256 amountOut = tokenBalance * lpAmount / totalSupply;
7        tokens[i].transfer(msg.sender, amountOut);
8    }
9    
10    lpToken.burn(msg.sender, lpAmount);
11}

Security Considerations

Rounding direction: Must round down (favor pool) to prevent extraction.

Order of operations: LP tokens should be burned before or atomically with transfers.

Reentrancy: External token transfers can trigger callbacks.

Balance manipulation: Donated tokens shouldn't inflate exit amounts.

When to Use Proportional Exit

✅ Recommended when:

• Withdrawing full position
• Wanting to avoid swap fees
• Pool is imbalanced (single-asset would incur high slippage)

❌ Not ideal when:

• Need only one specific token
• Rebalancing to a different allocation

Proportional exits are the "safest" exit mechanism from a pricing perspective, as they don't change the pool's ratio and have no price impact.