Hey guys! We noticed that there has been some confusion around the details of Liquidity Rewards V2. Let me try to clarify some key points, and also share more insight on how we designed this program for longer-term growth and sustainability.
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V2 is more dynamic and forward-looking. The reward pool grows every second month, rightfully rewarding users who contribute for a longer time. Instead of a fixed APR, you’ll earn rewards based on ownership – calculated based on your overall contribution as a percentage of total liquidity.
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V2 is more inclusive. pDEX is currently the only way to trade crypto privately, so we think it’s important to support a larger number of pairs, so end-users can buy and sell their whatever their preferred currency is. This is in keeping with our focus on utility.
Clarification on calculations
There may also be confusion regarding estimations and calculations. It is probably more useful to take a broader look at APR across an entire contribution (both sides of the pair), so I have tweaked the calculator. For example, here we have an APR estimation on the whole amount contributed (PRV + USDT parts):
In the new calculator, you can see:
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Amount of PRV contributed to the pool.
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Amount of USDT contributed to complete the pair.
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APR on total contribution (PRV + USDT)
Node pool vs Liquidity v2
As many of you will already know, I am a strong advocate for the importance of providing liquidity for Incognito’s long term health. For those comparing the liquidity program to the node pool based on returns alone, here are some thoughts:
- New nodes offer fewer benefits to the project than the same amount of tokens contributed towards liquidity pools. Of course, we are not naive in expecting users to forego all financial incentives in favor of the greater good. If you simply prefer to maximize your short term ROI before exiting, you are well within your rights to do so.
However do note:
- If you own another token in addition to PRV, your overall rewards are higher. For example, contributing 10,000 PRV & 6,700 USDT in liquidity will net you a larger return than putting 10,000 PRV in the staking pool and leaving 6,700 USDT in your wallet, and is of course, far better for Incognito.
Plans to support liquidity providers
For those worried about impermanent loss, we are working on a few solutions to mitigate risks.
One such solution is allowing liquidity to be provided from one side only. This is in development and will launch within the next month or so. We will share details as soon as it takes shape.
To everyone who is contributing to the network in some way, thank you. If you haven’t yet had a go at calculating your potential liquidity rewards, please play around with the new and improved calculator. I hope you’ll find a way to contribute that aligns with what you’re comfortable with.