Incentives 💎

Incentives in Proof-of-Liquidity (PoL) can be defined as a creative and customizable marketplace for Validator's $BGT emissions.

A simplified way to look at the whole incentive system where validators can pick and choose which incentives from Reward Vaults are worthy of their $BGT emissions, acquired via proposing a block.

Incentives For Validators 💰

$BGT emissions are distributed to liquidity providers via Reward Vaults. Below is an expanded view of the diagram in the Reward Vaults section, which additionally shows protocols providing incentives to Reward Vaults.

Once an active validator produces a block and emits $BGT, it gets to decide which reward vaults to emit their rewards to. Protocols' incentives provided to reward vaults are then rewarded to the validator proportional for the amount of $BGT emitted to the reward vault.

TIP

The above diagram only conceptually illustrates the flow of assets to and from reward vaults. It is not a contract-based overview.

In summary, the asset & user flow in reward vaults can be described as follows:

1. Users stake a pre-selected asset into a given Reward Vault
2. Protocols offer Incentives in exchange for directing $BGT to their Reward Vault
3. Validators direct $BGT emissions to Reward Vaults
4. Reward Vaults allow $BGT to be claimed by users who staked the pre-selected asset
5. Reward Vaults distribute Incentives to validators for emitting $BGT

Incentive Assets 🏦

Each Reward Vault can have a maximum of 3 assets that can be used as Incentives in exchange for $BGT. This also means that each Reward Vault can have up to 3 active Incentives at a time, meaning that if there is an active $USDC Incentive, this can be the only Incentive for this asset until it has been fulfilled.

Reward Vault Incentive Example 💡

Using $USDC as an example for an Incentive:

- User X creates Incentive: 100 `$USDC` for 1 `$BGT` (100:1 Ratio)
- User Y adds 10 `$USDC` Incentive: 110 `$USDC` (100 + 10) for 1.1 `$BGT` (100:1 Ratio)
- Validator Z distributes 1.1 `$BGT` to Reward Vault to fulfill Incentive and receives 110 `$USDC`
- User N create new Incentive: 300 `$USDC` for 1 `$BGT` (300:1 Ratio)

How To Whitelist Incentive Assets 📝

Incentives can only be created via successful governance proposals. Ecosystem, users and foundation decide on proposals based on their own due-diligence.

Incentives assets can either be proposed at the same time as a new Reward Vault or modified as a separate governance proposal.