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$SPICE Liquidity Farming and Self-Staking

Here is an overview of the liquidity farming options that will be available and how the community can participate.

// Please note that the SPICE liquidity farming structure has been updated based on a proposal to improve long-term value creation for the SPICE DAO community. The new structure will be effective as of the date that the DAO vote was live, i.e. February 12, 2021. Read up on the details here.

In order to incentivise the provision of liquidity and growth on DEX tradability for SPICE DAO’s index products as well as rewarding early index investors/hodlers, Mission Control allocates a portion of $SPICE to community members who provide liquidity pools for SPICE indices. This brief write-up will provide an overview of the structure and process.

How much $SPICE is allocated to liquidity farming and staking?

  • 5% of all $SPICE will be allocated to participants in the liquidity farming. This amounts to a total of 2.1M SPICE being distributed over 365 days in 4 time windows.
  • 2.5% of all $SPICE will be allocated to index investors that hodl index token, i.e. self-stake. This amounts to a total of 1.05M SPICE being distributed over 365 days in 4 time windows.

Where and how can I provide liquidity?

  • Liquidity provision for ETH and USDC pairs for any index launched by SPICE DAO will be rewarded.
  • This currently includes $SCIFI as well as $GBI and will include any index launched by SPICE DAO in the future.
  • Eligible DEXs include both Uniswap as well as Sushiswap.
  • Instructions on how to add liquidity, or create pairs, can be found on the respective DEXs.

How will the distribution take place?

  • Network snapshots will be taken on a daily basis in order to define who receives which allocation.
  • The total allocation of 5% LP rewards will be proportionately distributed to all liquidity providers, depending on their share of total liquidity provision.
  • The total allocation of 2.5% self-staking rewards will be proportionately distributed to all hodlers of index products, depending on their share of the total NAV holdings of all indices throughout the period under consideration.
  • Distribution will take place on the schedule outlined below.
  • The recent development of gas fees render it infeasible to transfer LP rewards. Henceforth, LP rewards must be claimed by the recipient.

Allocation timeline

In order to make sure that liquidity provision and self-staking is incentivised continuously over a period of time, the allocations will be divided into 4 distributions.

Participants within each time window will receive a quarter of the total allocation of each reward pool, respectively. The first time windows will be shorter and thus more heavily incentivised. The subsequent windows will become longer, as outlined below. Day 0 is the day on which the first index token ($SCIFI) was minted:

  • Distribution 1 // Day 0–15: 25%
  • Distribution 2 // Day 16–45: 25%
  • Distribution 3 // Day 46–180: 25%
  • Distribution 4 // Day 181- 365: 25%

Attribution

To incentivise long-term commitment we will assign an equal amount of tokens to each day in a given period.

The distribution of LP rewards will be based on the total NAV across all of SPICE DAO’s index products and will be proportionally divided among all liquidity pools on Uniswap and Sushiswap, based on the size of each pool during the period under consideration.

The distribution of self-staking rewards will also be based on the total NAV across all of SPICE’s index products and will be divided among all holders of index tokens according to their duration and proportional amount of index token holdings

The LP reward is calculated as follows:

The full amount D for a period (i.e. 25% of the full allocation) is evenly split into daily amounts. For example, with a 15 day period the daily amount

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After that, we proportionally distribute the daily amount Dd to all liquidity providers in the eligible pools. The snapshot time for each day is the end of that day. For example, a liquidity provider providing 10% of liquidity in the SCIFI-USDC pool will receive half of the tokens compared to a liquidity provider providing 20% of liquidity in the same pool.

Dd is calculated for every day in the period and the payout amount is determined (d’ the number of days in the period)

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Important: All pools are considered collectively, so the daily amount Dd is distributed over all eligible pools.

The self staking is calculated in a similar way:

Dd is determined in the same manner. For each day, a snapshot of all eligible wallets is made and Ddis distributed proportionally and summed up over all days in the period.

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