We are pleased to announce that Iagon is planning to launch a unique liquidity reward program designed to recognize token holders who offer liquidity on recently added DEXes. As previously announced, the program is scheduled to begin on April 21st.
It will exert its power on the DEXes Minswap and Wingriders, as well as the LSPO (Liquidity Stake Pool Offering) pool, in partnership with Norwegian crypto exchange NBX and ADAnorthpool for additional rewards for those who participate.
In this article, we want to tell you everything you need to know about the upcoming program and how to participate in it.
We strive to offer competitive reward structures that attract dedicated Liquidity Providers (LPs) and support the ongoing decentralization, growth and evolution of our ecosystem. It is important to note that such initiatives also contribute to the wider adoption of the Cardano blockchain. Our goal is to sustain this effort over the long term.
In recent months, the Iagon team has focused on developing the mechanism for the Liquidity Reward Program.
What are liquidity premiums?
Let’s dive into the exciting world of liquidity pools, a crucial part of the decentralized finance (DeFi) ecosystem! These pools are reserves of cryptocurrencies locked into smart contracts and used for crypto exchanges. Each liquidity pool consists of two tokens, hence the nickname “pair”.
The creative minds behind these pools implement smart contract-based designs that allow them to operate as decentralized exchanges using the Automated Market Maker (AMM) model. Unlike traditional order book exchanges, cryptocurrencies are traded through smart contracts and not with other users. Exchange rates are determined by mathematical formulas, creating a transparent and unbiased marketplace.
Liquidity Providers (LPs) are rewarded with shares in the pool equal to the size of their deposit. A transaction fee is charged for each swap and distributed among the LPs according to their share of the total liquidity. It is a sophisticated system that benefits both LPs and traders.
What sets our Liquidity Rewards program apart?
Our Liquidity Rewards program is designed to motivate our community to increase IAG/ADA liquidity. As an added bonus, participants who provide liquidity and delegate their tokens to our LSPO (Liquidity Stake Pool Offering) receive exclusive loyalty bonuses.
Our goal is to incentivize our community to take an active role in growing our ecosystem while rewarding their engagement and support.
Key highlights of the upcoming program:
- We have committed an incredible 30 million IAG tokens to our liquidity program. The remuneration of the participants depends on the amount of liquidity they provide and the duration of their participation.
- After the program is finished, The awards are distributed over a period of 12 months to ensure continued engagement and benefits.
- Participants in the LSPO receive additional IAG awards, increasing the overall value of the program. The ADA collected from the pool will be used by the Iagon team for further program improvement (85% of LSPO’s ADA rewards will be used to provide liquidity, with half of the funds going to buy $IAG tokens. The remaining Part is used by team IAGON and may be used for liquidity providers in the future.)
- Get ready for something very special – We will be revealing exclusive NFT rewards in the near futureso keep your eyes peeled for more details!
Where do you have to bet to get rewarded?
There are two main ways to participate in the Liquidity Rewards program:
- Make ADA tokens available to the LSPO pool by delegating them to the pool address (IAGL1, pool ID: pool1ztk6dcj2nc3plnujf3ek6jqngtx8hcryufz56lyumemlcy2xxn0 – link is here). This gives you additional IAG premiums from the liquidity program.
- Provide both ADA and IAG tokens in the verified pools of our partner DEXes. This gives you rewards from the liquidity program in proportion to your share of the total liquidity. Look out for verified pools to ensure the safety of your funds. Earn rewards now and contribute to the growth and success of the Iagon ecosystem!
As mentioned before, we will be working with several DEXes – Minswap and Wingriders. To participate, visit their website and look for the verified pools to earn rewards.
Additionally, there will be an LSPO pool in partnership with Norwegian crypto exchange NBX and ADAnorthpool. Those who delegate there are rewarded with additional bonuses.
Our official liquidity stake pool is already in place. Check the correct name – it’s IAGL1 – the link is here.
Our commitment to the safety of our pool runs deep. We have left no stone unturned in our efforts to protect ourselves from potential supply chain attacks. We conducted rigorous privilege escalation testing and subjected our pool to multiple rounds of security reviews.
Our efforts don’t stop there; We constantly monitor our pool’s performance metrics through automation and careful monitoring. We even went a step further and set up timesync devices and redundancies to ensure our pool runs like a well-oiled machine.
We take our responsibilities seriously and our users can rest assured that their assets are protected at all times.
Liquidity Premium Calculator
Another thing we would like to mention is that we are excited to launch our Liquidity Reward Calculator. It will be available to the public soon. Stay connected with updates.
With just a few clicks, you can see how your contributions can earn you rewards over time based on various parameters:
- Your deployment period (length that you deploy your liquidity in the pool)
- Amount you bet
- Amount you delegate to the LSPO pool (IAGL1)
This powerful tool takes the guesswork out of calculating your potential rewards and makes it easier for you to understand the benefits of joining our program.
How are the rewards calculated?
We understand that not everyone is interested in the technicalities and complex calculations that go into our Liquidity Rewards program.
That’s okay because we’re here to make it as easy as possible for you. If you simply want to participate and earn rewards for your liquidity, you can skip the jargon and focus on the simple steps of providing liquidity.
We want everyone, regardless of their level of technical expertise, to be able to participate and benefit from this program. So don’t worry if you’re not a tech expert – we’ve got you covered!
However, below you can see the technical and mathematical details of how the bonuses are calculated. We will use such a reward calculation function that meets the following requirements:
- promoting longer embargoes;
- Promotion of higher lock volumes;
- Allow unlocking at any time (not necessarily continuously, maybe once per epoch);
- Providing an increase in reward value (calculated in USD)
- Monitoring the amount of tokens issued as rewards worldwide (the closer we get to the 0.5-3% limit, the slower the reward rate increases);
- Provides an extra boost for people delegating tokens under the LSPO.
The first two requirements suggest that the reward function should be super-linear in terms of time and volume (if it were linear, there would be no difference between being locked for many shorter periods of time and a longer period of time; the same is true for amounts locked). If we look at the way the continuous compounding of interest is handled, we could propose an exponential relationship, i.e.:
(1)
Where:
- A0 is the set of blocked tokens,
- t0 is the time the tokens were blocked,
- T is the moment of unlocking,
- Vt is the token value (e.g. in USD) at the time of activation
(we divide by it to make growth exponential in terms of value and not token amount), - A is the degree of a.g. approx. 1.2 m, but this has yet to be determined),
- B is the growth coefficient (also to be determined).
Formula (1) now makes sense when the total amount of tokens given out as a reward is far below the cap. As it nears that point, we need to start curbing exponential growth. The idea is to multiply the exponential component by another function that starts at 1 but tends to 0 when we reach the limit. An idea for such a function is:
(2)
Where:
- No is the total amount of tokens issued as rewards so far,
- N max is the maximum allowed amount of tokens provided for rewards (i.e. currently 0.5-3% of total token supply),
- C is the damping coefficient (higher values of γ make this component stay near 1 longer, but at the cost of a steeper rise as we approach the limit; lower values would make the initial fall more drastic).
Finally, we need another multiplicative term that reflects an individual’s participation in the LSPO. For someone who does not participate, this term should only be 1 and should not affect the total reward. With participants, it makes sense to consider their relative contribution (percentage). Two open questions (reflected in two additional parameters) are:
- What is the maximum reward boost for a hypothetical case of a single participant?
- How should the increment due to LSPO involvement grow as the percentage increases? Should it be linear, sublinear, superlinear?
This leads us to the following candidate function:
(3)
Where:
- Pd is the fraction of an individual’s delegated tokens compared to the total volume (a real number between 0 and 1),
- e is the coefficient that determines how the LSPO increment depends Pd (a e of 1 would imply a linear relationship, higher values would disproportionately favor high percentages, and lower values would favor moderate participation).
- D is a coefficient that limits the maximum reward boost due to participation in the LSPO (if D is small, a hypothetical single LSPO participant would experience a dramatic increase in their reward; if it is large, the LSPO effect on the overall reward is negligible; D ≈ 2 corresponds in extreme cases to an increase by a factor of 1.5).
The final reward function is the product of (1), (2) and (3):
For more information and other updates, please follow us on our social media or visit the IAGON website!
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