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Note that exits are expected to go live on Mainnet towards the end of August, 2023.
The Filecoin network requires Filecoin Storage Providers to lock up FIL as pledge collateral in order to mine rewards — usually for 18 months. As a result, the underlying FIL becomes illiquid for long durations, which makes processing exits a tricky challenge.
The first iFIL exit mechanism is simple and will work for a large number of use cases, yet suboptimal in terms of its inefficiency. The mechanism allows stakers to redeem FIL from their iFIL at the current iFIL price, so long as the pool has the liquidity to process the exit. The pool holds 10% of it assets as a reserve for exits.
If the pool begins to use the reserves, Storage Providers cannot borrow funds from the pool until the reserves are rebuilt again.

Optimal models

The V2 exit mechanism will likely involve a form of duration vaults — where long-term stakers can earn more fees, and generate daily liquidity for short-term stakers. This will take some time to develop properly.