Table of Content
- Aelin Funding
- Synthetix Staker and Trader Token Distribution
- Sovereignty Phase
- OP Token Phase 0 Distribution
- Community Rewards
- Trial Liquidity Mining on Velodrome
- Liquidity Mining Incentives
Kwenta distributed 5% of the initial total token supply pre-inflation (15,668.65 KWENTA out of 313,373) via the Aelin protocol on Optimism. This provided Kwenta with funding for development. Pool contributors received vKWENTA which was directly interchangeable for KWENTA at launch. vKWENTA will not be stakeable or usable in Kwenta governance, it must be converted to KWENTA to be used within the DAO.
Synthetix Staker and Trader Token Distribution
To facilitate the owed distribution of KWENTA tokens to SNX stakers and Synth traders, the Kwenta DAO hosted a two-week Aelin pool with 35% of the initial supply on November 1st, 2022 which enabled eligible addresses to acquire KWENTA with a 1-year vesting period.
1% of the KWENTA token supply at launch was allocated to the Sovereignty Phase trading competition, totaling 3,133.73 KWENTA tokens. All KWENTA distributed from this allocation are on a 1-year linear vesting schedule as described under the vesting mechanism. At least 1,000 addresses were eligible for at least 1 KWENTA, assuming adequate participation
Week 1-2 (Complete)
The Kwenta Sovereignty Phase began on February 14th with the launch of the KWENTA Aelin raise. Allocated to the Aelin Pool was 5% of the initial supply.
Week 3 (Nov 9th - Nov 15th )
On Wednesday, November 9th, Round 1 of the Futures competition commenced. The round one prize pool included 465 KWENTA.
Week 4 (Nov 15th - Nov 22th )
On Wednesday, November 15th, a second round of the Futures competition was held where everyone started on equal footing. The round two prize pool included 2383.73 KWENTA along with 100k $OP.
Week 5 (Nov 16th)
Kwenta will launch staking-trading rewards. Rewards will be computed off-chain and sent out weekly.
Week 6 (Nov 16th)
The Kwenta token launched. Pool contributors that participated in the Aelin raise and received vKWENTA or veKwenta will be able to redeem for KWENTA now. All rewards earned during the Sovereignty Phase were distributed to participants, with the exception of ongoing LP rewards.
LP rewards were available for those that contribute to the Optimism Uniswap V3 KWENTA/ETH pool for the first four weeks. Liquidity incentives are reviewed at the end of the initial period and either continued as is, adjusted, or discontinued. 783.43 KWENTA were available for this opportunity.
- Pool: $KWENTA/$ETH
- Fee Tier: 1%
- Reward: 0.25% of the initial supply (783.43 KWENTA)
- minPrice: 0
- maxPrice: Infinity
OP Token Phase 0 Distribution
Kwenta is being distributed 900,000 OP tokens but is required to propose how the tokens will benefit the Optimism ecosystem. Kwenta will use the OP tokens to fuel development and incentivize trader migration to Optimism. Kwenta will leverage the OP token to drive Optimism adoption while relying on Kwenta’s tokenomics and unique product offerings to retain those users who migrate.
The distribution for Kwenta’s OP is as follows:
- Platform Migration Incentives 66%
- Competition Prizes 14%
- DAO Contributor Incentives 20%
Perps V2 Trading Incentives
Amount: 600,000 $OP
Rewards for each trader will be calculated based on a rewards score. This score will be calculated by multiplying fees paid with a trader's KWENTA staking boost. This replaces the calculation in KIP-61 with:
traderScore = feesPaid * kwentaBoost
The calculation being replaced is:
traderScore = feesPaid^0.8 * averageoi^0.2
Each trader will still earn a pro rata share of the total weekly rewards as:
traderScore / sum(traderScores) * weeklyReward total = yourReward
kwentaBoost values will have three tiers based on a stakers' KWENTA balance at the time of the rewards snapshot. The tiers are:
|1 ≤ $KWENTA < 10||1.05|
|10 ≤ $KWENTA < 25||1.075|
|25 ≤ $KWENTA < 100||1.1|
|$KWENTA > 100||1.15|
KWENTA balance for each user will be the sum of staked escrow and liquid staked KWENTA at the time of each snapshot.
The Kwenta $OP trading rewards program was paused for epoch 6 due to the Optimism Bedrock upgrade. This means that any trades made on Kwenta during epoch 6 have not receive $OP trading rewards. The $OP rewards program will be extended for one week to make up for the missed $OP rewards in epoch 6.
Competition Prizes: 120,000 OP
Method: Kwenta hosted 2 competitions to kickoff the launch of the Kwenta token. The OP token was used to incentivize participation by being added to the prize pool.
Amount: 180,000 $OP
Method: Individuals who have contributed towards governance and development within the Kwenta DAO will receive 50% of the OP based on a Core Contributor-derived assessment of the value provided by the included members. 50% of the OP would put towards Kwenta devDAO bounties, incentivizing development on top of Kwenta and Optimism.
Below is a list of the roles that have provided value to the Kwenta DAO’s development and a recommended amount of Kwenta tokens to allot in total per NFT/role group and how many people are within that group. Rewards are additive.
- Kwenta Council (5) - 750 $KWENTA
- Treasury Council (3) - 450 $KWENTA
- Macro Token Audit (1) - 60 $KWENTA
- Admirals (7) - 225 $KWENTA
- Product Elites (5) - 200 $KWENTA
- OG Product Elites (3) - 21 $KWENTA
- Bounty Hunters (30) - 210 $KWENTA
- Community Developers (4) - 160 $KWENTA
- Outside Contributors (23) - 595 $KWENTA
- Kwenta Advisors (3) - 380 $KWENTA
- Kwenta Elites (30) - 900 $KWENTA
- Kwenta Competition NFT Holders (12) - 60 $KWENTA
- OG POAP (63) - 63 $KWENTA
- Marketing Ticket Completors (9) - 63 $KWENTA
With a supply of 313373, the above allocation amounts to about 1.32% of the initial supply, and will come from the 15% allocated to CCs. All Kwenta tokens are subject to a 1 year vesting period.
Trial Liquidity Mining on Velodrome
Kwenta should divert 50% of the current LM allocation (391.71625 KWENTA) towards bribing a Velodrome vAMM KWENTA/ETH pool. Velodrome also currently matches bribes using their OP allocation which has recently been renewed. LPs would receive an amount of VELO which is boosted by the voters, and voters of the pool would receive liquid KWENTA & OP. After the 1 month period performance of the different platforms should be compared and liquidity mining rewards adjusted accordingly.
The trial ran for one month, starting December 12, 2022.
One month extension of incentivized Arrakis (UNI-V3) LP pool
Continue the existing Arrakis LP program, but lower the rewards from 783.43 liquid KWENTA to 195.8575 liquid KWENTA for the second month. Direct the other 391.71625 liquid KWENTA to the Velodrome trial as per KIP-46. Undertake a review at the end of this trial month to compare the results of both platforms.
The extension ran for one month, starting December 15th, 2022.
Volodrome/Uniswap Liquidity Mining Test 2
The first test was a trial of Velodrome's liquidity mining program. The results of the first test can be found here. Velodrome attracted roughly ~50% more TVL per 1 $KWENTA of incentives than Uniswap. This test will decrease the total incentives allocated to liquidity mining from 587.57375 KWENTA to 400 KWENTA split 50/50 instead of 66/33.
- Allocate 50 KWENTA per week to the Velodrome pool for one month.
- Allocate 50 KWENTA per week to the Uniswap pool for one month.
The second trial ran for one month, starting January 15, 2023.
Liquidity Mining Incentives
KIP-46, KIP-49, and KIP-50 (Section 5.6 of the KSL) introduced a trial of liquidity mining between Uniswap and Velodrome. The results of the second trial have been analyzed and, as a result, the below was proposed to incentivize liquidity mining on Velodrome.
The allocation of liquidity mining incentives will be based on the KWENTA inflation schedule, starting from epoch 16. The incentives will be equal to 0.5% of the scheduled inflation for each epoch. For example for epoch 16 the proposed 0.5% of the scheduled inflation would be 53 KWENTA.
Liquidity mining incentives allocation schedule:
- Epoch 13: 50 KWENTA Velodrome, 50 KWENTA Arrakis
- Epoch 14: 50 KWENTA Velodrome, 35 KWENTA Arrakis
- Epoch 15: 50 KWENTA Velodrome, 20 KWENTA Arrakis
- From epoch 16 and beyond, all of the liquidity mining incentives will be allocated solely to Velodrome.
Increase liquidity incentives for 12 weeks
As per KIP-64, the existing liquidity incentives (bribes) are set at 0.5% of the epoch's inflation schedule, which roughly equates to about 30 KWENTA per week. A phased adjustment to liquidity incentives over a 12-week period, ranging from 1% to 3% of the planned inflation. The increased liquidity incentives started in epoch 48.
The approach is as follows:
Start with an adjustment to 1%. In the subsequent epoch, increase the rate by an additional 1% under two conditions:
- If staking APR exceeds LP APR.
If slippage on a swap worth $10,000 or more exceeds 2%.
Reduce the rate by 1% in the following epoch if:
- LP APR surpasses staking APR by more than 20%.
- Slippage on a swap worth $10,000 or more is below 1%.