The liquidity distribution mechanism of TEN
Tenet adjusts the liquidity distribution ratio between liquidity providers and liquidity tap creators through cyclical rebalancing. Factors such as their share of LP token to investment portfolio are considered so as to ensure risk is controllable and help the long-term development of Tenet protocol.
After a certain period, Tenet protocol will monitor the amount of TEN trading pair LP tokens in liquidity tap and calculate the latest ratio. To smooth the curve, the dynamic ratio in the next cycle will be an average value. As a result, the dynamic ratio will stay at a reasonable level. Moreover, Tenet protocol adjusts temporary factors to optimize the distribution of tokens.
TEN reward for each block can be divided into two parts: TEN reward for liquidity providers and TEN reward for liquidity tap creators. The initial ratio is 1:1.
The reward distribution ratio for the next 80,000 blocks on ETH (400,000 blocks on BSC) is based on the ratio of providers’ LP tokens in ETH-TEN (BNB-TEN) pool to that of creators in the previous 80,000 blocks on ETH (400,000 blocks on BSC) for about 2 weeks. Community can govern the cycle for adjusting distribution ratio.
TEN mined by liquidity providers belong to them. TEN mined by liquidity tap creators (the demand side of liquidity) are distributed to tap’s liquidity providers.
To encourage liquidity tap creators to create more taps and give multiple mining incentives to liquidity providers, the amount of LP tokens added by liquidity creators are multiplied by (1+X). The initial X=0.2, X can be adjusted by community.
How to calculate:
TEN(USERS) : TEN that liquidity providers (USERS) can mine
TEN(CREATORS) : TEN that liquidity creators can mine
TEN(H0) : The number of TENs awarded by the current block.
LP(USERS): Total number of ETH-TEN LP Tokens added by all users
LP(CREATORS): the total number of ETH-TEN LP Tokens added by all creators
X : liquidity tap creator mining bonus multiplier