Crescent Network provides liquidity incentives to two different liquidity providers: liquidity pool (LP) investors and market makers on orderbook. The market maker incentives will be introduced in Crescent DEX v2.
In this section, how the incentive for LP providers will be received.
Crescent DEX provides incentives to liquidity pool (LP) investors via farming.
We target to design the incentive plan to break away from the bleeding competition prevalent in the DeFi market and create a capital-efficient and sustainable ecosystem. In the initial stage, LP incentives are provided to stabilize the market and diversify investment options for CRE holders.
Farming Status Change: FarmQueued and FarmStaked
A user having a pair of two coins can deposit those coins to a pool, which is a kind of providing liquidity to the pool.
When the user deposit the pair of two coins, the user will get the corresponding pool tokens.
When the user farms the pool tokens, then the pool token goes into the status of FarmQueued.
After 24 hours are passed, the pool token in FarmQueued automatically goes into the status of FarmStaked.
For the pool token in FarmStaked during the entire epoch time, the corresponding farming rewards will be dropped.
When the user unfarms the pool token of FarmQueued and FarmStaked, the pool token is instantly given to the user.
When the user withdraws the pool token, then the user gets the calculated amounts of coins.
How coins and pool token status could changed
Annual Percentage Rate (APR) of LP Incentives
The APR displayed in the UI is the expected APR, which means how much rewards the user will receive if the user starts to farm now.The detailed equation is as below.
Calculation of expected A
How to get the farming rewards (LP incentive)
When a user deposits a pair of two tokens into a pool, they receive a certain amount of pool tokens based on the amount of deposits. Once the user triggers to farm some amount of the above pool tokens, the farming clock is getting started and the request stays in the queue for 24 hours. After 24 hours, the farm requests of all users in the queue are automatically staked at once. It changes the state of requests and the actual farming begins.
Example of farming timeline
Day 1: A user deposits a pair of tokens into a pool, and begins liquidity farming
The user’s pool tokens for their contribution is now QUEUED for farming, farming to be activated after 24 hours.
Day 2: The user’s contribution to the pool is now farming rewards based on the APR(Annual percentage rate)
A full 24 hour period (Day 2 00:00 UTC ~ Day 3 00:00 UTC) as FarmQueued and FarmStaked has to pass in order to receive rewards
Day 3: The user’s contribution has now yielded rewards(CRE), which can be claimed
The confirmed rewards can be claimed at Farm>Manage>Claim
Day 4: The user then decides to unfarm the whole contribution on this day
Upon unfarming the full amount, unclaimed confirmed rewards are given, but rewards for Day 4 is not included because Day 4 hasn’t fully passed yet
When a user requests to claim the rewards or unfarms whole staked pool tokens, the rewards accumulated until then are instantly received to the user.
Now, what happens when a user adds liquidity to an already farming pool?
Case of additional farming
Day 2: Seeing yielded rewards, the user decides to add liquidity to their already farming position
The newly added amount is now in queue for farming, while the initial amount remains farming rewards
What if you partially unfarmed during a farming epoch?
Case of partially unfarming
In this example, the user unfarms 50% of the user's farming amount. Then, only the mount of farming will be eligible for rewards during the epoch, claimable at the end of the epoch.