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construction-of-dlp-and-usdzero-power.md

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Construction of dLP & $ZERO Power

ZeroLend's dLP power, closely mirroring Radiant Capital's model, is a pivotal metric in determining a user's influence within the protocol and their corresponding emissions rewards. Here's a streamlined explanation of how it works:

dLP Power Calculation (P_dLP)

  • dLP Power (P_dLP): This metric reflects a user's share of the total dLP pool, adjusted by a locking multiplier to reward longer commitments.

$$P_{dLP} = dLP_{tp} \times L_{dLP} = \frac{dLP}{\textrm{Total dLP}} \times L_{dLP}$$

  • $$P_{dLP}$$ is the user's total percentage of dLP relative to the entire pool.
  • $$L_{dLP}$$ is the locking multiplier, enhancing power with longer lock periods.

{% hint style="info" %} The longer the user locks dLP, the greater the power they have and ultimately the greater the emissions the user receives. {% endhint %}

Single-Staked $ZERO Power (P_Z)

  • $ZERO Power (P_Z): Similar to dLP power, this calculates a user's stake in the total $ZERO pool, also influenced by the duration of the stake.

$$ P_{Z} = $\textrm{ZERO}{tp} \times L{Z} = \frac{$\textrm{ZERO}}{\textrm{Total ZERO}} \times L_{Z} $$

The following are the weighting coefficients:

Time Lock L_d-Value L_z - Value
1-Months 2 0.5
3-Months 6 1.5
6-Months 12 3
12-Months 24 6
24-months n/a 12
48-months n/a 24

Combining Powers for Total Protocol Power

By integrating both dLP and $ZERO powers, the total Protocol Power is derived, factoring in both contributions and their respective locking multipliers.

$$ P = P_{dLP} + P_{Z} = dLP_{tp} \times L_{dLP} + $\textrm{ZERO}{tp} \times L{Z} \ \hspace{2em}\= \frac{dLP}{\textrm{Total dLP}} \times L_{dLP} + \frac{$\textrm{ZERO}}{\textrm{Total ZERO}} \times L_{Z}\hspace{0.8em} $$

Final Equation for Protocol Power

$$ \textrm{Protocol Power} = (P) \times f(T_p) \ = (\frac{dLP}{\textrm{Total dLP}} \times L_{dLP} + \frac{$\textrm{ZERO}}{\textrm{Total ZERO}} \times L_{Z}) \times f(4 \times \frac{$\textrm{ZERO}_2 \times 2}{Deposits} + 1 \times \frac{$\textrm{ZERO}_1}{Deposits}) $$

This formula underscores the significance of both liquidity provision and single asset staking in enhancing a user's impact on the protocol's governance and reward distribution, thereby incentivizing long-term participation and investment.

{% hint style="warning" %} This functionality is scheduled to go live shortly. {% endhint %}