LP Reward
Rewards for LP (liquidity providers) on DotSwap.
Last updated
Rewards for LP (liquidity providers) on DotSwap.
Last updated
(Updated December 4th, 2024) 50% of the total DOTSWAP•DOTSWAP (50,000,000) 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.
27.38% — In Circulation
57.62% —Liquidity Provider Rewards
7.62% — Early LP Rewards: (converted from LP Points)
50.00% — Future LP Rewards
14% — Marketing & Liquidity
1% — Team
DotSwap rewards liquidity providers (LPs) who contribute to selected trading pairs. Rewards are distributed in two ways:
Fee Rewards: LPs earn a proportion of the BTC trading fees generated in each eligible pair.
Provider Rewards: LPs receive rewards simply for providing liquidity to eligible pairs.
LP Points are earned by providing liquidity to selected trading pairs. These points can be converted into DOTSWAP tokens as part of the Early LP Rewards program.
14% of the total DOTSWAP•DOTSWAP supply is reserved for marketing and liquidity initiatives. These funds will be used to promote DotSwap, expand its reach, and enhance the trading experience.
1% of the total DOTSWAP•DOTSWAP supply is allocated to the DotSwap team.
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.
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, FB, or NUSD fees generated by the pair in relation to the total trading BTC fees of all pairs on DotSwap in a reward cycle.
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.
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.
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.
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/$DOG liquidity pool. Now, if the BTC/$DOG 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.
14% of DOTSWAP•DOTSWAP (14,000,000) will be allocated to marketing and liquidity initiatives. These funds will be strategically used to promote DotSwap, expand its reach, and enhance the overall trading experience. Potential uses include community engagement campaigns, liquidity provision incentives, exchange listings, and partnerships.
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.
1% of the total DOTSWAP•DOTSWAP supply will be reserved for the DotSwap team.
