Liquidity Incentive

The x/liquidityincentive module incentivizes liquidity providers by distributing rewards based on their contributions to liquidity pools. It uses an epoch-based reward system and a gauge voting mechanism to allocate rewards dynamically. This module ensures sustainable liquidity provisioning while allowing users to participate in governance through gauge voting.

Key Features

1. Epoch-Based Reward Distribution:

   • Rewards are distributed at the end of each epoch.

   • Lazy accounting minimizes computational overhead by calculating rewards only when claimed.

2. Gauge Voting:

   • Users can vote on which liquidity pools should receive incentives.

   • Voting power is determined by $vRISE tokens (non-transferable staking tokens).

3. Lazy Accounting for Rewards:

   • Rewards are tracked using accumulators and distributed only when users claim them.

   • This reduces the computational load on the network.

4. Dynamic Incentive Allocation:

   • Incentives are allocated based on pool weights (gauges) determined through voting.

Core Concepts

Epochs

• Two epochs exist concurrently:

  1. Past Epoch: The epoch that has ended.

  2. Current Epoch: The ongoing epoch.

• Each epoch has the following parameters:

  • start_block: The block where the epoch begins.

  • end_block: The block where the epoch ends.

  • gauges: A list of gauges (pool weights) for incentive distribution.

Gauge

• A gauge represents a specific liquidity pool's weight in reward allocation.

• Parameters:

  • pool_id: The ID of the liquidity pool.

  • ratio: The voting power allocated to this pool.

Lazy Accounting

• Rewards are not distributed immediately but are calculated when claimed.

• Formula for calculating rewards:

$$\text{ClaimAmount}_{ij} = \frac{\text{PositionUnclaimedAccumulation}_{ij}}{\text{PoolUnclaimedAccumulation}_{i}} \times \text{PoolUnclaimed}_{i}$$

Workflow

1. BeginBlocker

• Creates a new epoch if:

  • The last epoch has ended.

  • No epochs exist (first epoch).

2. EndBlocker

• Transfers a portion of inflation rewards from the**x/distribution**pool to the x/liquidityincentive pool.

3. Reward Distribution

• Rewards are accumulated in each pool's fee accumulator.

• Users claim rewards by interacting with their positions in liquidity pools.

Sequence Diagram: Reward Distribution

Code Examples

Query Epoch Information:

import { SunriseClient } from "@sunriselayer/client";

async function queryEpochs() {
    const cometRpc = "https://sunrise-test-da.cauchye.net/";
    const client = await SunriseClient.connect(cometRpc);
    const queryClient = client.getQueryClient();

    if (!queryClient) {
        console.error("Query client not initialized");
        return;
    }

    const epochs = await queryClient.liquidityincentive.epochs({});
    console.log("Epochs:", epochs);
}
queryEpochs();

Example Output:

{
  "current_epoch": {
    "start_block": "100",
    "end_block": "200",
    "gauges": [
      { "pool_id": "1", "ratio": "0.6" },
      { "pool_id": "2", "ratio": "0.4" }
    ]
  },
  "past_epoch": {
    "start_block": "0",
    "end_block": "100",
    ...
  }
}

See Github for details.