Platypus Liquidity Mining Design, ELI5 : Part I
Introducing how Platypus rewards our LPs with an innovative liquidity mining design.
Many of you have been asking about Platypus tokenomics. Kicking heels no more, we’re going to explain our liquidity mining mechanism in this 2-part medium blog.
PTP Mining: A 3-Pool Design
Platypus delivers its native token PTP through three different pool for liquidity mining: namely the Base Pool, Boosting Pool and AVAX-PTP Pool (Pool 2), accounted for 30%, 50%, and 20% of the liquidity emission, respectively.
Bear in mind that the proportion can be changed in future. It will be done by the Platypus team, or by you via voting once governance is enabled.
How Platypus Delivers PTP to the LPs
Let us now explore how Platypus implements liquidity mining through a combination of Base Pool and Boosting Pool. These two pools deliver PTP tokens to Platypus’ stablecoin depositors, aka liquidity providers of the protocol.
Here is a general picture of the liquidity mining with the two pools:
- Each stablecoin account (e.g. USDT) is assigned a weighting.
- There are monthly emissions of PTP tokens from the two pools. Each stablecoin account can receive the tokens proportional to its weighting.
- Each deposit in a stablecoin account can claim a certain proportion of the account’s allocation reward.
- The Base Pool and the Boosting Pool reward the depositors in different ways.
- A deposit can generate PTP tokens from both pools at the same time.
Base Pool
The Base Pool simply rewards a deposit at an amount that is positively proportional to its share of the aggregate deposits.
This can be easily understood with an example. Let’s imagine that Bob is one of our LPs.
Then Bob can gain 300,000 × (1,000/1,000,000) = 300 PTP tokens as his monthly token emission from the Base Pool. The more stablecoins Bob has deposited, the more PTP he can generate from the Base Pool.
Boosting Pool
Depositors can generate additional tokens from the Boosting Pool by staking PTP tokens. The Boosting Pool serves multiple purposes:
- To incentivize PTP tokens purchase
- To encourage long-term staking
- To make farming TVL directly related to staked token
The Boosting Pool utilizes an additional token, voting escrow PTP (vePTP), inspired by voting escrow CRV (veCRV) of Curve Finance. How does it work? Have a look at the below vePTP attributes :
- 1 staked PTP generates 0.014 vePTP every hour
- Maximum vePTP held with a deposit equals to 100 times PTP staked for the deposit
- Upon unstaking PTP, vePTP drops to 0
- vePTP is not transferable nor tradable
Rewards in the Boosting Pool are also determined by math. There is a weight function assigned to each deposit:
As shown by the function, each deposit has a weight that is equal to the square root of the product of deposit size and the amount of vePTP. The reward to a deposit is proportional to its weight with respect to the aggregate weights of all deposits.
Let’s illustrate the rewards formula with the example of Bob again.
- Bob has deposited 1,000 USDT into Platypus.
- Also, he has staked 400 PTP for a month on Platypus. Since 1 staked PTP generates 0.014 vePTP every hour, he now has 4,032 vePTP tokens (assume 1 month = 30 days).
- According to the weight function, his deposit has a weight of √(1,000✕4,032) = 2,008
- Meanwhile, the aggregate weights of all deposits amount to 5,000,000.
- The monthly reward delivered by the Boosting Pool to the USDT account is 500,000 PTP.
Then Bob can gain 500,000 × (2,008/5,000,000) = 200.8 PTP tokens as his monthly token emission from the Boosting Pool. If Bob’s deposit has a larger weight share, then he can generate more PTP tokens from the Boosting Pool.
Too Technical?
Here’s the takeaway:
- The Base Pool delivers tokens solely based on the stablecoin deposits.
- The Boosting Pool requires depositors to stake PTP and delivers tokens based on both staked PTP and stablecoin deposits.
Next Up
Part II will talk about how to generate more PTP tokens from the two pools. Don’t miss out!
