Liquidity Grant Program
In order to solve the liquidity issue faced by rTokens, the StaFi team has launched an Initial Liquidity Grant Program (ILG Program) which will reward initial rToken liquidity providers on StaFiHub, which mainly consists of core community members and the Foundation of Target Chains.
There are many candidates taken into consideration for the early provision of liquidity such as Cosmos Ecosystem project developers, community whales as well as Venture Capitalists. After much consideration, the StaFi team has concluded that the Foundation of Target Projects (FOTP) has the most substantial benefit and motivation to be an initial liquidity provider of rTokens on StaFiHub.
This can be justified due to the following:
1.The Foundation of Target Projects (FOTP) has the greatest motivation to increase the staking ratio of their respective networks through StaFiHub’s Liquid Staking Solution.
2.The FOTP will also have an adequate amount of native tokens from their respective Treasury/Reserves for the provision of liquidity in large quantities (e.g. 1 Million USD)
Therefore, the StaFiHub team has been in continuous discussions with FOTPs in the Cosmos Ecosystem to obtain partnerships as well as initial liquidity support. The StaFi team ultimately aims to build a mutually beneficial relationship between StaFiHub and Cosmos Ecosystem FOTPs through a protocol fee sharing scheme.
StaFiHub aims to share a part of StaFiHub’s protocol fee to incentivize Cosmos Ecosystem FOTPs for long term initial liquidity provision as well as assist them in improving rToken adoption among their community members.
The protocol fee sharing scheme under the ILG Program will allocate a certain percentage of the respective rToken’s Liquidity Fee to FOTPs as an incentive. The rToken Liquidity Fee is calculated by using the formula provided below:
Where Alpha is set at 10% and Beta is set at 0.2%.
To clarify, the Liquidity Fee is all that StaFiHub is able to collect from a new rToken solution. Based on the Tokenomics and Fee allocation rules of StaFi Protocol, 10% of the Protocol Fees are allocated to the development team to cover basic development costs including relay nodes services and human resource costs, 70% will be allocated towards buyback and burn schemes, and the remaining 20% will be allocated to the StaFi Treasury.
Initially, a 10% reward from Protocol Fees was introduced to incentivize StaFi Community Developers in developing their own rTokens based on StaFi protocol. However, the liquidity of rTokens is critical to the success of the rTokens developed. Therefore, StaFiHub will be providing a portion of the 10% rewards to initial liquidity providers.
In conclusion, the FOTP incentives are derived from the 10% obtained by the development team who are more than willing to share this with StaFiHub partners to elevate and ensure the prosperity of StaFi Protocol as a whole.
Calculation of FOTP ILG Program Grant Rewards: