LP Reward

Rewards for LP (liquidity providers) on DotSwap.

Overview

53.62% of the total DOTSWAP•DOTSWAP (53,619,380) supply are set to be released over 4 years as rewards for liquidity providers and DAO governance funds, with a reward cycle of 144 BTC blocks (≈24 hours).

The details on the release schedule and reward allocation rules may be subject to change as proposed by future DotSwap DAO proposals.

  • 53.62% LP Rewards

    • Fee reward: Rewards distributed to trading pairs chosen by the DAO members, and in proportion to the BTC trading fees generated them.

    • Provider reward: Rewards for simply providing liquidity to trading pairs chosen by the DAO members.

  • 19% DOTSWAP•DOTSWAP are reserved as a DAO-managed treasury and stored in a multi-sig address every week.

    • 18%: DotSwap DAO governance funds.

    • 1%: DotSwap Team.

53.62% — LP rewards

We took inspiration from Uniswap and its governance token $UNI, and curated this tokenomics for DOTSWAP•DOTSWAP, which is meant to serve as the ultimate utility token and incentivizer for the DotSwap ecosystem.

Fee reward

A portion (announced later) of DOTSWAP•DOTSWAP LP rewards will be allocated and released as fee reward in the next 4 years. The reward cycle is set at 144 BTC blocks (≈24 hours).

The amount each individual liquidity provider gets is determined by:

  • Liquidity contribution: The percentage of the liquidity they provided to a given trading pair;

  • Fee share: The percentage of the BTC fees generated by the pair in relation to the total trading BTC fees of all pairs on DotSwap in a reward cycle.

Fee structure

2% — BRC20 Trading Fees:

DotSwap implements a 0.6% transaction fee for all trades conducted on its platform. This fee is split into two parts:

1.6% — Added directly to the liquidity reserves. This increases the k value of the liquidity pools, meaning the value of all LP positions are also increased, which will eventually be paid out to liquidity providers when they remove their liquidity from the reserves;

0.4% — Reserved for the DotSwap team. This portion is securely stored in a public multi-sig address for transparency and accountability purposes.

See how the fees will be distributed in the LP Reward section.

To ensure long-term sustainability and better support our active community, DotSwap is updating its fee structure from 0.6% to 2%. Our AMM swap now adopts a 2% transaction fee, with 1.6% going to liquidity providers and 0.4% reserved for platform growth.

Provider reward

A portion (announced later) of the DOTSWAP•DOTSWAP LP reward will be allocated and released as provider rewards for liquidity providers in the next 4 years, with a same reward cycle of 144 BTC blocks (≈24 hours). The provider reward is a different set of rewards split evenly by a number of trading pairs, chosen by DAO members through proposals and voting.

The amount each individual liquidity provider gets is determined by:

  • Liquidity contribution: The percentage of the liquidity they provided to a chosen trading pair;

  • The number of trading pairs sharing the reward: DAO members will propose and vote which trading pairs should be granted a share of the Provider Reward.

Additional requirements

  • Rewards less than 1 DOTSWAP•DOTSWAP will not be released, and will be stored in a LP Reward reserve.

  • To be eligible for the reward, you must be a liquidity provider for the entire duration of a reward cycle.

  • If there's no eligible pair to split the reward, the DOTSWAP•DOTSWAP funds will be stored in a LP Reward reserve.

  • In the extreme cases of cheating, volume faking, or any other forms of conduct detrimental to the ecosystem, the DotSwap team shall reserve the right to withhold the LP Rewards for the trading pair(s) in question.

Example

Suppose you've provided 1 BTC and 1,000 $DOG to the BTC/$DOG trading pair. This contribution makes up 10% of the total BTC/$DOG liquidity pool. Now, if the BTC/$ORDI trading pair accounts for 50% of the total BTC fees on DotSwap during a reward cycle (144 BTC blocks ≈ 24 hours), and if there are 10 trading pairs sharing the Provider reward, your reward for this cycle will be:

  • 5% of the total fee reward, calculated by multiplying your liquidity contribution (10%) by the trading pair's Fee Share (50%).

  • 1% of the total provider reward, calculated by multiplying the provider reward (100%) by your Liquidity contribution (10%) and then dividing it by the number of trading pairs sharing the reward (10%).

In other words, your reward is a reflection of your contribution to the liquidity pool, the BTC fees generated by your chosen pair and the total number trading pairs sharing the provider reward.

19% DAO Governance Funds

19% of DOTSWAP•DOTSWAP (19,000,000) will be allocated as a DAO-managed treasury, the 1% part will be reserved for the DotSwap team. Every DAO member will have a say in how this portion of the DOTSWAP•DOTSWAP funds will be used to help the community and ecosystem thrive.

As mentioned above, the funds will be released in sync with BTC block generation, and will be distributed every week and safely stored in a public multi-sig address.

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