> For the complete documentation index, see [llms.txt](https://docs.crescent.network/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.crescent.network/introduction/snowball-liquid-amm/reward-auction.md). # Reward Auction As previously mentioned, Crescent employs a reward auction to tokenize liquid farming positions. The fee revenue generated from the underlying position consists of the two tokens used for trading by default. However, the farming reward provided as an incentive for the position can be in the form of CRE or an additional token from an external protocol. While the module could directly swap these tokens into trading tokens and reinvest them, such a process could result in losses due to imperfections of automated swap logic and create vulnerabilities to potential MEV attacks. These attacks could disrupt the intended swap plan and reduce the profits of sb token holders. To mitigate these risks, it is preferable to competitively dispose of the reward tokens in the market at a minimal discount. By allowing only the sb token itself as the quote token for the auction, we eliminate the need for additional reinvestment process. Instead of sending the accumulated rewards to the auction winner, the module receives a certain amount of sb tokens. These sb tokens that enter the module through the auction are immediately burned. Unlike a normal burn where the user withdraws the original two tokens while burning the sb token, in this case, only the sb token itself is burned. The module does not send any tokens elsewhere in response. To clarify, participants in the auction are required to deposit two trading tokens in order to mint sb tokens for bidding. After the auction concludes, the winning bidder is determined, and the sb tokens they bid on are burned, effectively removing those sb tokens from circulation. As a result, the auction reward is automatically reinvested from the perspective of existing sb holders. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://docs.crescent.network/introduction/snowball-liquid-amm/reward-auction.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.