Liquidity Generation Event and XP Program
What is the Liquidity Generation Event?
Reya Network is a revolution happening in stages. Before it can be the Liquidity Network, it needs to bootstrap sufficient liquidity to unlock its network effects. The aim is to create a flywheel effect: deep liquidity generates optimal trading conditions and attracts traders, while large trading volumes in turn lock in liquidity and ensure superior returns on capital. Furthermore, the existing liquidity will make it more attractive for new DEXs to move onto the Network to tap into it’s liquidity, further attracting more trading flow.
This is where the Liquidity Generation Event (LGE) comes in. Embedded into Reya Network is a passive liquidity pool, which is made available to every DEX on the Network. During LGE, we are inviting the community to support and seed liquidity into the Network. By being early, LPs who deposit during LGE will be able to get boosted rewards based on the capital deployed.
Once trading opens the passive pool will then start generating returns for LPs. In simulations using Synthetix orderflow for ETH between April and December 2023, Reya Network’s liquidity design would have provided an APY of 65% compared with the actual returns of 12% on Synthetix. How? Because the Reya Network mechanism design is a lot more capital efficient!
As always, being an LP also comes with risks that should be carefully considered.
The bootstrapping incentives program
The fundamental aim of the incentives program is to unlock the network effects in Reya’s design by seeding a sustainable initial level of liquidity.
The incentives program will use a unified measure of activity in the Network: Experience (’XP’). Users can earn Experience, or XP, for various activities on-chain. All these different activities are rebased into an XP balance that will then be used to distribute [redacted]. Since multiple partners are used within the Reya Network design, additional reward programs may also be announced as the Network develops.
We are inviting users to be among the first LPs on Reya Network. In return the incentives program prioritises early adopters by providing a boost for experience points earned.
So, how do I participate in the LGE?
Participating in the LGE is simple — all that’s needed is USDC if staking capital from Ethereum Mainnet, or USDC.e if staking from any supported L2. The Reya Network dApp simplifies this flow, using a fast bridging partner called Socket.
XP growth is time based, meaning it accrues with time on the assets staked. Every time you stake during LGE, you earn a boost that will multiply your XP accrual rate. This means that LGE LPs not only get a head-start in the amount of time they accrue XP, but they will also accrue XP faster than later users for comparable amounts of capital staked. In this way, early users are recognised for their importance in bootstrapping the Network.
And as a peak, XP will also unlock some important features in the Network. The head-start will get you well on the way to being a Reya Network power user.
Here’s an example :
- The earliest LPs depositing to the pool earn a 10X boost. That means that instead of accruing (say) 50% annualised XPs, they get 500% annualised on the capital deposited in this period.
- LPs depositing to the pool later might get a 2X boost.
In case of multiple deposits at different boosts, final boost is counted as the capital-weighted average. For example, if you stake 10,000 USDC at a 10X boost and 5,000 USDC at a 2X, then your final boost is calculated as:
LPs keep their boost on the capital staked during LGE up until withdrawal. Withdrawals are possible are any time, but when withdrawn the boost on the withdrawn amount is permanently lost (but kept on the amount that remains staked).
How-To-LGE
- The mechanism is simple, in order to participate in the LGE, you simply need to stake assets. The assets available to stage are USDC from Ethereum mainnet or USDC.e from supported L2s. Additional assets will be introduced later.
- Funds on Reya Network are non-custodial and available to withdraw at any time. A withdrawal button on the dApp is coming soon to improve UX, but in the interim you can withdraw directly from the Reya Network smart contracts should you wish to do so. If you withdraw, however, you will permanently loose the XP boost on the withdrawn capital.
- The LGE starts at midday UTC on the 22nd April and lasts until midday UTC on 6th May. Reya Perp DEX will then go live, meaning trading will start, at midday UTC on 7th May.
- EVM compatible wallets can be used to connect to the LGE page. Funds can be deposited from Ethereum Mainnet, Arbitrum One, Polygon PoS, and Optimism Mainnet.
