Wombat’s LP Rewards Mechanism
Let’s take a look at how Wombat rewards LPs with our liquidity pool innovation!
We have been getting a lot of questions about our LP rewards so here’s a high-level explanation of how liquidity mining works at Wombat! Let’s Go!
How can you obtain Wombat’s native token?
You can obtain WOM through liquidity mining from two pools, which are:
- Base Pool - 37.5%
- Boosting Pool - 62.5%
All liquidity mining rewards are distributed via our native token WOM. Pool proportions can be altered in the future, either by the Wombat team or by a community vote once governance is enabled.
How Is WOM Rewarded to LPs?
Wombat delivers WOM through a combination of our Base Pool and Boosting Pool, which accounts for 37.5% and 62.5% of emissions. Monthly emissions of WOM tokens for both pools are allocated to Wombat’s stablecoin pools (USDT, USDC, BUSD, DAI) based on the weightings of each stablecoin pool relative to Wombat’s entire liquidity pool. As an example, depositing USDT makes you eligible for rewards from the WOM allocated to the USDT pool from our monthly emissions. Your rewards as an LP will be a proportion of the pool’s allocated emissions.
Now take a closer look at the Base Pool and Boosting Pool to understand how rewards are calculated for both pools.
Base Pool
The Base Pool issues WOM tokens to a deposit at an amount that is positively proportional to its share of the aggregate deposit. The token emission for a deposit in the Base Pool is defined as:
Example:
- Alex deposits 5,000 USDT into Wombat
- Total USDT deposited on Wombat = 1 million USDT;
- Monthly reward allocated by the Base Pool to the USDT account is 300,000 WOM.
Alex is eligible for 300,000 × (5,000/1,000,000) = 1,500 WOM tokens as his monthly reward from the Base Pool. The more stablecoins Alex deposits, the more WOM he can earn from the Base Pool…Simple as that!
Boosting Pool
You can also earn additional WOM from the Boosting Pool by locking WOM tokens. The Boosting pool was created to incentivize token purchases, encourage long-term investing, and develop a strong TVL directly linked to lock boosting.
The Boosting Pool incorporates voting escrow WOM (veWOM) for rewards accrual. The team drew inspiration from Curve’s veCRV hard lock model and enhanced its flexibility and earning power. Locking any amount of WOM applies a boost to ALL stablecoin pools but the APR will vary based on your position and the actions of other users. veWOM’s attributes are as follows:
- Users can lock WOM for a period between 7 days and 4 years to mint veWOM based on the following formula
- Users can have multiple locking positions (up to 10,000) with different locking periods and WOM amounts
- Maximum veWOM held with a deposit equals to 1x WOM staked for the deposit
- After the expiration of a position, users can redeem WOM anytime. However, once redeemed, respective veWOM is burned. i.e. your veWOM balance will continue to boost your rewards after lock expiration unless you redeem the underlying WOM
- veWOM is not transferable or tradable
Rewards from the Boosting Pool are calculated using a weight function w in conjunction with veWOM amount(shown below)
After calculating your boosting weight, plug it into the following formula to calculate your total WOM Rewards
APR Calculation
Use the following formula to calculate your APR for each stablecoin pool:
TLDR:
- The Base Pool delivers rewards solely based on the stablecoin deposits
- The Boosting Pool requires users to lock WOM for veWOM and delivers rewards based on both WOM and stablecoin deposits
- Stake stablecoins and lock WOM for maximum rewards!
Join The Wombat Squad
Website | Twitter | Telegram Community | Telegram Announcement| Discord
