Symmetric Rewards & Tokenomics

9 min readJul 3, 2021

This post gives an overview of the tokenomics for the Symmetric governance token. It shows how the token economy is designed to create a flow of value to key economic participants and aligns their interests. It explains how community can participate in governance through the Symmetric DAO and earn rewards by completing outstanding tasks. We also cover how the token will be mined, allocated and rewarded to participants. The post then concludes with a note on fees earned on swaps.

What is Symmetric?

Symmetric is an AMM that enables the decentralised exchange of digital assets using liquidity pools on the Celo & xDAI network (coming soon to others). In traditional finance, centralised exchanges use an order book to match buyers and sellers — in contrast, DeFi’s Automated Market Makers (AMMs) execute trades in a decentralised, transparent and permission-less way.

Symmetric DEX - An AMM for xDai, Celo & Polygon

The Symmetric tokenomics model issues SYMM coins as a bonus reward to stakeholders bringing value to the Symmetric…

symmetric.finance

Symmetric token economy

The token economy is designed to reward value creators in the ecosystem. Symmetric achieves this using the governance token (ticker:SYMM). The tokens are minted and distributed based on a predetermined, declining quantity-schedule over 104 weeks (2 years) to key participants of the economy.

These SYMM coins are then used to participate in governance proposals, by voting through the Symmetric DAO. These proposals will shape the future of the DEX, its various functions (e.g., community or risk fund) and ecosystem.

Key actors — motivations & purpose
Liquidity providers — motivated by returns to liquidity provided
Arbitrageurs & traders — want to profit by trading & arbitrage opportunities
Seed Investors — private sale participants holding SYMM tokens
Community — use Symmetric, are active and provide constructive feedback
DAO participants — govern the DEX and act as ambassadors for Symmetric
Operations — responsible for ongoing operations and further development
Risk Fund — held by Symmetric to provide an added layer of protection
*Other stakeholders; networks supported, listed tokens, new projects bootstrapping liquidity or community, existing projects launching new products and those looking to diversify by going up or downstream, across the value-chain

Liquidity Providers (LPs)

The Symmetric DEX/AMM is the primary product in the Symmetric ecosystem. To incentivise liquidity providers, rewards issued to them reflect the largest share — with 48% of all tokens minted over 2 years.

Liquidity mining rewards are highest for the first 3 months, reducing by 33% for another 10 months and then finally settling after another 50% reduction — to a third of its original-level, for the remainder of the term.

Image description: Token Allocation at ‘Month 0’ vs ‘Month 24’

The exact reward amounts are calculated weekly — with a prorated amount of SYMM coins issued, based on the liquidity provided by each wallet address relative to the total liquidity on Symmetric. The unit of measure when calculating liquidity across coins is USD. Rewards are not issued for pools containing SYMM coins on other exchanges (e.g., Uniswap pools).

Arbitrageurs & traders

Although motivated differently, this group can also earn rewards from the LP allocation using the same methodology as liquidity providers.

Seed investors (Private sale)

A vesting schedule of 20% per month applies to the original private sale token holdings of 31,400 tokens, held by seed investors.

There are no additional rewards issued on unvested seed tokens. But similar to LPs & traders, seed investors can also become eligible for rewards through liquidity mining, using the same channels as other liquidity providers.

Community fund

The purpose of the community fund is to ensure that members of the community adding value to the Symmetric ecosystem, are compensated.

The community fund will pay out in two ways:

First — Anyone will be able to list bounties (must be sponsored by a DAO member), which can be completed by community members for compensation. Typically, bounties would be for bugs and vulnerability reporting, or work outside the scope of operations ( e.g., new features, new products or services the community wishes to develop for the ecosystem).

*Second — Funding proposals can be submitted by anyone to the community function in the DAO for a vote and if approved will pay out to the proposing party. This allows anyone in the community to put forth ideas and seek funding. Proposals don’t have to be technical in nature and can include community events, training days or new types of pools for the DEX.

*Note: Funding proposals for community-based projects are not live yet — please follow us on social media for the latest updates

Symmetric DAO members

In order to join the DAO, users will need to be in possession of SYMM coins. There is no allocation of rewards for solely participating in governance proposals. However, DAO members are not restricted from earning rewards by providing liquidity directly to the DEX.

Image description: SYMM coin (or tokens) issued over time

Operations

Reward tokens include a 24-month budget for running operations through the DAO, for both founders and new members alike. This replaces a traditional founding team allocation. Unlike a founders-fund, the operations fund is not pre-mined and pays out over time as the operations team further develops Symmetric and grows the ecosystem. The initial ‘month 0’ allocation for operations will vest at 20% per month starting at day 30, after launch.

The operations team will support daily activities and implement/respond to proposals raised by the Symmetric DAO. Members of operations who part ways (for any reason), will no longer earn from this allocation — but may earn rewards in the same way as other liquidity providers. The composition of the team is expected to change over time, as new individuals with varying skill sets are added to scale operations.

Risk fund

The risk fund exists to provide an additional layer of protection from malicious attacks, losses incurred due to vulnerabilities in Symmetric and losses from approved coins whitelisted on the DEX. The risk fund will be managed transparently through the risk function in the DAO.

The DAO will evaluate the nature of any incidents before approving the magnitude and timing of any pay-outs. It may also use this fund to reduce risk through other means and find more capital-efficient protection with time.

The risk fund will initially be capped at value at risk in pools, with any excess funds going to other categories (excluding operations). The cap ensures the risk fund does not become redundant and stays capital efficient.

Reward tokens issuance schedule

The table linked to from below represents the token minting and issuance schedule, including the private sale to seed investors at ‘month 0’, which was used to cover the costs of the launch (e.g., external smart contract audit, marketing and seeding pools).

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**More information on the Symmetric Token event can be found here https://medium.com/@Symmetric.Finance/symmetric-token-event-c7d170fdc6e0

Reward token distribution rules:

Private pools — SYMM tokens accrue to the pool controller
Shared pools — SYMM tokens accrue to the liquidity providers (LPs or pool token holders)
Smart pools — for pools created normally, SYMM tokens accrue to smart pool token holders (LPs). But pool creators/controllers can register to “redistribute” to have SYMM assigned automatically to token holders, or “redirect” to distribute manually
Contracts — If smart pool tokens are held in a contract and cannot be withdrawn (e.g., a staking contract), a redirect can be used to assign reward SYMM tokens to an account.

*Note: Although rewards are calculated weekly, they will NOT be paid out until new SYMM coins are minted, based on the monthly schedule supplied

Rewards pay-out calculation

The weekly reward calculations are made as follows:

Each week a script calculates the predicted last block for the week and the first block of the week (or the last block from the previous 1-week period). Calculations are completed to determine the last block of each and every single hour during that 1-week period
Using CoinGecko, a query of each pool is run to determine the token price for every individual token in each pool and the USD value of that pool
The pool’s liquidity is multiplied by a ‘ratio factor’. Since out of balance pools have lower contributions to trading volume (due to higher slippage), this ensures out-of-balance pools have a lower weight in the final SYMM token distribution, this is calculated for each pair of assets in a pool, using the equation below.

Ratio factor for pairs of assets (in an 8 asset pool, there will be 7 pairs)

Pool liquidity is multiplied by a ‘wrap factor’, since pools with pairs of hard-pegged tokens (e.g., DAI and cDAI) also have lower contributions to trading volume (traders can wrap DAI for cDAI or vice-versa). Liquidity in certain pairs (like cETH/ WETH) have a 0.1 ‘wrap factor’ (i.e., count 10 times less), reducing rewards to these liquidity providers.
In soft-pegged pairs, assets are not directly convertible but track the same underlying asset-price, such as stable coins or synthetics paired with their own real-world assets (e.g., sETH and WETH). Liquidity in soft pegged pairs (like cETH/ WETH) have a 0.2 ‘wrap factor’ (i.e., count 5 times less than regular pairs)
A ‘rewards boost’ may be applied to SYMM and other approved coins to encourage staking of those coins.
Liquidity in pools with lower fees contribute more to volume — so an adjustment to the pool liquidity by a ‘fee factor’ is applied to down-weight pools based on fees. The constant k is initially set to 0.25 to not excessively penalise high-fees pools.

fee factor adjustment applied to calculate adjusted liquidity

Calculate the proportional, adjusted liquidity USD value that each liquidity provider has in the pool, including any ‘rewards boost’
Divide the weekly amount of SYMM coins distributed by the number of hourly blocks in the month.
For each hourly cycle block, calculate the number of SYMM tokens allocated to each address. This is calculated for each address in proportion to the total liquidity of that account (considering all pools that account has contributed to), divided by the total liquidity.

Note: Symmetric DAO can propose to adjust this pay-out model. It’s expected to change as tokens are added and optimisations identified. This model is based on Balancer’s model (as Symmetric is a fork of Balancer) and incorporates some of the ‘lessons learned’. Source: https://balancer.finance/whitepaper/

Swap Fees

On Symmetric every liquidity provider has the ability to create pools, add liquidity and set their own fees, which participants then pay to execute swaps between tokens. These fees will accrue to the creators/LPs of the pool. The minimum amount of fees is set at 0.15% of the total transaction amount. These are added on top of network transaction costs, which can vary based on the network being used (e.g., xDai or Celo).

Although most pools created by the operations team will have swap fees set close to the minimum amount permitted, users of Symmetric are advised to check costs, prior to executing any token swaps. We do not expect these charges to have a material effect on the overall tokenomics or value flows within the token economy — aside from what’s already been discussed. Despite this, the DAO will actively review fees, to ensure Symmetric’s fee policy stays aligned with the DAO’s long term objective to further develop and grow Symmetric and its ecosystem.

Disclaimer: Symmetric advises all users and stakeholders to do their own research before participating in any swaps or pools. We strongly suggest users only add or swap liquidity, that they can afford to lose. The views expressed in this post are not financial advice.