Inferno - An incentive program to bootstrap liquidity in Forge

Authors

• Evmos DAO (Telegram, Twitter)
• Orbital Apes (Website, Twitter)
• Forge (Telegram, Twitter)

Summary

Introducing Inferno - a 12 week long incentive program to bootstrap liquidity in Forge, the community owned DEX of Evmos. The Forge team is requesting 3,000,000 Evmos to fund this initiative. The program aims to solve the liquidity issue on Evmos but also leverages the potential of concentrated liquidity and staked assets. Such a highly attractive incentive program combined with concentrated liquidity and LST has never been done in the Cosmos ecosystem before. Potentially making Forge the most capital efficient DEX within the Cosmos!

Goal

Create sustainable liquidity and volume on Forge but also raise awareness about DeFi on Cosmos with solidity-based applications.

Abstract

Motivation

The Evmos blockchain has the potential to become a unique environment for DeFi in the IBC ecosystem, but it has had its fair share of roadblocks that have slowed down and limited growth. By incentivizing staked assets (such as stEVMOS, stATOM, rETH) people will earn staking rewards while providing liquidity and participate in the incentive program; no DEX on Cosmos has done this yet which is a unique value proposition of Forge. On top of that highly concentrated pools can be created between the native and staked asset (such as stATOM/ATOM) with limited impermanent loss risks but lot of revenue potential.

Action plan and Pools

The full incentive program has a duration of 84 days - divided into 4 periods of 21 days. Before each period the incentive rewards will be liquid staked to stEVMOS and rolled into the 21 days program. As a result of liquid staking, the Stride DAO council committed to add 1,000 STRD/day to the incentive program.

We selected 7 pools in total and put them into three different incentive tiers. Our goal is to avoid fragmentation and get deep base liquidity on Evmos. The requested daily emissions equal to 7.9% of the current staking emissions. Users providing liquidity will potentially earn staking rewards, liquidity emissions from this program and LP fees. To find a rough estimate of the APR at $1M TVL per pool, please open the spreadsheet. Keep in mind that if the TVL is below $1M TVL, the APR is higher and vice versa.

Tier 1 - ~9,286 EVMOS daily emission per pool

• stEVMOS/stATOM
• stEVMOS/axlUSDC (+ 600 Stride incentives)
• stEVMOS/axlRETH

Tier 2 - ~2,589 EVMOS daily emission per pool

• stEVMOS/STRD (+ 200 Stride incentives)
• stATOM/ATOM (+ 200 Stride incentives)

Tier 3 - ~1,339 EVMOS daily emissions per pool

• axlUSDC/ceUSDT
• axlRETH/axlWETH

Vesting

The time-vesting uniswap staker is a fork of the Uniswap v3 staker that adds a linear vesting period for positions to receive the full amounts of the accrued rewards. Linear vesing of rewards is intended to prevent ultra-concentrated liquidity from gaming the incentives and extract most of the rewards. You can read more about it on this post.

While the incentive rewards accrue proportional to liquidity, in the same way that trading fees do, the vested fraction increases linearly while the position is in range. Rewards that have not been accrued to positions not being staked or out of range or withdrawn before end of vesting period, would be rolled over to the next cycle.

Rewards claiming

Vesting is calculated when you unstake the position. So, when you unstake the position, the contract checks if the liquidity was active for longer than the vesting period. If it is, you get all rewards for the amount of active liquidity you provided in the time period. if it's not it gives you the ratio of timespent/vesting period*(rewards received if there was no vesting period).

Timeline

Incentives can kick off once they're approved through governance and after Revert completes atleast the first two milestones of their funding proposal. We estimate the week of the 22nd May.

Adjustments

If the liquidity of a pool does not match our expectation we might make adjustments on the allocation per pool as we learn during this program. Each change will be discussed on Forge’s social channel and communicated upfront.

Multisig 4/6

All the funds will eventually flow to the liquidity providers.

• LPX | DAO
• George | DAO
• CtrlAltApe | OrbitalApes
• John | Stride
• Rok | Qubelabs
• Luis | Interbloc

Safe Deployment Address: evmos:0xb75ce906a270F7680Faf1A2F6D70F4f28061B87a

Highlighting Engaged Community Members

Special thanks for input & feedback on this program from Luis (Interbloc), _Nick (active community member) and John Galt (Stride).