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Liquidity Farming mechanics

This page describes new liquidity farming mechanics applicable for earning rewards within the Genshiro parachain

Objectives

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

  • Rewards pool: 60M GENS tokens.
  • Epoch length: 7 days
  • Number of epochs: 48
  • Reward per epoch: 1.25M GENS tokens

Distribution mechanics

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:
Factor
Explanation
gens_multiplier
GENS as % share of the entire user portfolio - percentage share of GENS relative to the entire user portfolio value: collateral + insurance + market maker pools liquidity. The higher the share, the higher the multiplier, it is capped by 2x value when GENS weight is more or equal to 50% of the entire portfolio.
debt_factor
Borrower's debt value - average dollar value of all negative balances of the borrower over the period of one epoch.
insurance_factor
Bailsman's liquidity value - average dollar value of all assets sitting in the bailsman pool over the period of one epoch.
mm_factor
Market Maker pools liquidity value - average dollar value of all assets locked in the market making liquidity pools over the period of one epoch.
The exact formula is the exponential utility function which is used to calculate how many GENS tokens each users receives during each epoch:
u=gens_mult∗debt_factorw1∗insurance_factorw2∗mm_factorw3u = gens\_mult * debt\_factor^{w_1} * insurance\_factor^{w_2}* mm\_factor^{w_3}
​
w1=0.3, w2=0.4, w3=0.3w_1 = 0.3, \ w_2=0.4, \ w_3=0.3
 - weights of each factor, which may be subject to change after we collect some production data.
user_reward=reward_per_epoch∗u∑uuser\_reward=reward\_per\_epoch*\frac{u}{\sum u}
where the sum is over all user balances in the system.
Please further refer to this python simulation to calculate actual numbers.

Market maker rewards

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. 1.
    maker volume: make > 5% of total maker volume on the exchange during the epoch.
  2. 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

DEX trading rewards

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.
Mechanics - Previous
Borrowing mechanics
Last modified 1yr ago