Incentives

Incentives encourage active participation from suppliers and borrowers, enhancing liquidity and the overall efficiency of the protocol. It should be noted that there is no one source of various incentive initiatives, but they can originate from multiple sources, including the treasury and external entities interested in promoting liquidity for specific reserves.

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Liquidity Pool Incentives

Incentives can also be applied to the supply or borrow side of liquidity pools, promoting activity of the incentivised reserve. By offering rewards to suppliers and borrowers of certain assets, the visibility and adoption of tokens can be boosted. Such external incentives require governance approval.

Approved incentives are distributed continuously over time proportional to the amount of liquidity a user supplies or borrows. Users can claim rewards via the protocol’s incentive controller, which manages the allocation and distribution of incentives. This system adds value for those actively participating in the protocol while aligning user interests with the health and stability of the ecosystem.

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Safety Module

The Safety Module is a reserve designed to secure the protocol against unexpected shortfalls. In return for staking tokens and taking on the associated risk, participants earn rewards, typically in the form of additional tokens or other incentives approved by governance. These rewards not only compensate stakers but also enhance the protocol’s security by ensuring sufficient reserves are available to cover potential deficits.