Liquidity Bootstrap Plan
To encourage the community to provide liquidity to rToken pairs on rDEX, StaFi Foundation allocates 5 million FIS (approximately 5% of the total), from the Communit y Treasury as the total reward pool for the rDEX Liquidity Mining Program.
This happens in a gradual manner. By the time the Spring Program is complete, rDEX supports all rToken/FIS pairs, leading to the accumulation of enough liquidity for the stage.
During this phase, rDEX explores different ways of deployment on StaFiHub, in order to support Native Token and FIS trading pairs, such as ATOM/FIS, etc. This eventually enables trading between rToken and Native Token (FIS as the route token). So most of the mining incentive for the Summer Program is Native Token/FIS, with rToken/FIS as a supplement.
After the first two phases, rDEX will shift to this phase where 1 million FIS will be reserved as a long-term support plan. During this phase, rDEX will explore different ways of supporting community voting, as this will determine the allocation of mining incentives in each transaction to Pool incentives.
rDEX supports only transactions between StaFi chain native rToken and native FIS token. So in order to participate in the Spring Program mining incentive, you need to meet any of the following three conditions:
You can acquire native FIS in several ways.
- Huobi Global exchange supports Native FIS, so you can get Native FIS directly from there.
- Binance only supports ERC-20 FIS, so you can get ERC-20 FIS from there and then convert to native FIS through StaFi’s rBridge;
- Note that native FIS needs to be stored via the Polkadot JS mobile extension wallet. See: How to use Polkadot JS to store native FIS.
Please note that for either of the three conditions, you need a small amount of Native FIS as Gas Fee. If you need a small amount of Native FIS, you can get it through StaFi’s FIS Fee Station. Refer to FIS Fee Station Guide.
Users can deposit 2 Tokens simultaneously on rDEX, or any single one, to provide liquidity. They can participate in rDEX liquidity mining activities in any of the following ways:
1.Deposit only StaFi chain native rToken.
2.Deposit only Native FIS tokens.
3.Deposit both StaFi chain native rToken and Native FIS token in any ratio.
When a user deposits, s/he will receive a LP token as proof of liquidity supporter. The LP token can be transferred or staked to participate in rDEX’s Liquidity Mining Program.
When users obtain LP tokens, they nee to deposit them into rDEX Bonded Liquidity Gauge to get Liquidity Mining Rewards. If not, theu only receive the trading fees without Liquidity Mining Rewards.
Many liquidity mining programs initiated by DEXes can see a short-term liquidity spike followed by a liquidity crash when liquidity mining ends. So, rDEX-sponsored liquidity mining programs encourages long-term liquidity even more. To incentivize rDEX’s long-term Liquidity Provider, the rDEX Liquidity Farming Module sets up different Bonded Liquidity Gauges, with each Gauge corresponding to a different amount of the total FIS mining reward pool. The longer the locked-in Gauge corresponds to higher FIS, the higher the total reward.
Bonded Liquidity Gauges of rDEX in the Spring Program are set as follows:
1.No-lock period, with a total FIS award weight of 1 assigned by Gauge.
2.Lock-in period of 30 Days with a Gauge-assigned FIS total award weight of 1.2.
3.Lock-in period of 60 Days with a Gauge-assigned FIS total award weight of 1.5.
4.Lock-in period of 90 Days with a Gauge-assigned FIS total award weight of 1.8.
This means that with the same amount of participating liquidity funds, the APY return from participating in the 90-day lock-in mining plan will be 80% higher than that without the lock-in period.
When the users locks the LP token to the rDEX Bonded Liquidity Gauge, they receive an automatic real-time FIS reward from the rDEX contract, which has no lock-in period and can be claimed by the user at any time.
In most cases, long-term LPs always earn more than the value of the initial liquidity provided, but LPs would also incur some losses that will make long-term LPs earn less than the value of the initial liquidity provided, i.e., an Impermanent Loss. To encourage long-term LPs, rDEX plans to create an rDEX Impermanent Loss Protection to compensate for the potential impermanent losses of long-term LPs.
The core mechanism is when an LP satisfies a certain lock-up period. If the liquidity value corresponding to its LP token is lower than its original deposited value, the loss it incurs will be compensated by the rDEX Impermanent Loss Protection Reserve. In this way, the risk of LPs incurring an Impermanent Loss can be greatly avoided.
However, during the Spring Program phase, when rDEX is still in the early stages of development, the price of rToken will be vulnerable to significant increases or decreases in liquidity. In such a scenario, the introduction of the Impermanent Loss Protection Reserve reward program may not only fail to achieve the original purpose we envisioned, but also encourage whales to manipulate the liquidity of rDEX to influence the price of rToken, and then obtain a large amount of rDEX Impermanent Loss Protection Reserve compensation.
Therefore, rDEX will compensate for the possible Impermanent Losses of LPs by increasing the total amount of rewards in the Liquidity Mining Program during the Spring Program phase. Subsequently, in the Summer Program and Autumn Program stages, when rDEX’s development has gradually matured, its mining incentive APY will tend to stabilize. With long-term belief in rDEX’s development of LP in the continued provision of liquidity, rDEX launches the Impermanent Loss Protection Plan to compensate for any Impermanent loss that may occur