Liquidity Farming mechanics
This page describes new liquidity farming mechanics applicable for earning rewards within the Genshiro parachain
Genshiro’s successful functioning as a money market and decentralized exchange largely depends on the amount of liquidity locked in the system. There are 3 possible ways to use the liquidity in the system:
- as collateral for borrowing
- as liquidity for the insurance pool (bailouts)
- as liquidity for market maker pools.
To accelerate DEX and money market liquidity and encourage the overall product usage, Genshiro proposes the new liquidity farming model with rewards and duration outlined further.
- Rewards pool: 60M GENS tokens.
- Epoch length: 7 days
- Number of epochs: 48
- Reward per epoch: 1.25M GENS tokens
Distributions will happen at the end of each epoch proportionally to the average user balances / factor values over the course of the epoch.
Genshiro tokens will be distributed to users according to the formula which rewards users based on the combination of the following factors:
The exact formula is the exponential utility function which is used to calculate how many GENS tokens each users receives during each epoch:
- weights of each factor, which may be subject to change after we collect some production data.
where the sum is over all user balances in the system.
1.5% of total GENS supply (18M GENS tokens) will be allocated for MM rewards each 48 epochs (~ 1 year).
Any market maker account has to meet following conditions to be eligible for rewards for the epoch:
- 1.maker volume: make > 5% of total maker volume on the exchange during the epoch.
- 2.order-book maintenance: average numbers within the epoch should fall within following limits:
- spread is less than 2%
- more than 20 orders booked on each side
- more than 5,000 EQD booked at 5% spread
- more than 20,000 EQD booked at 10% spread
- more than 50,000 EQD booked at 20% spread
Genshiro will have a series of DEX related events to facilitate more active trading on its exchange. These events will have a reward cap in GENS. Please follow our social media channels for further announcements. Genshiro considers following types of rewards:
Active trading rewards: per epoch rewards in GENS tokens for most active traders. E.g. some quantity of GENS tokens proportional to the overall exchange volume during the epoch.
Referral program rewards: each user account will have a unique affiliate link associated with it. When users sign up with a particular affiliate link, the link owner will be rewarded in GENS tokens based on the trading volume/fees its affiliates pay.