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Incentives

Incentives in 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 is like a bounty board for validators to pick and choose which incentive/gauges seems worthy of their $BGT emissions, aquired via proposing a block.

Incentives For Validators

$BGTemissions are distributed to liquidity providers via Gauges. Below is an expanded view of the diagram in the Gauges section, which additionally show protocols providing incentives to gauges.

Berachain Testnet Faucet

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

WARNING

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

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

  1. Users → assets into gauge
  2. Protocols → incentives into gauge
  3. Validators → $BGT emissions into gauge
  4. Gauge → $BGT to users for providing assets
  5. Gauge → incentives to validators for emitting $BGT

How are Incentive Proposals Created? (WIP - as third party not decided)

Incentives can only be create via successfull voting done via governance. Ecosystem, users and foundation decide on proposals based on the their own due-diligence.

To learn how to creative proposal,

Criteria for Incentives

Before a protocol may provide incentives, the incentive asset must first be whitelisted through a $BGT governance proposal (often done in tandem with a gauge whitelisting proposal). There is a limit of 3 incentive assets per gauge, although this is subject to change.

When creating an incentive, the one providing incentives must:

  1. Specify the amount of incentives to be rewarded per 1 $BGT emitted by validators
  2. Provide the incentive assets into the gauge

Example

  • The Berachain Foundation wishes to incentivize the $bHONEY gauge
  • They provide 1 $wBTC, 10 $wETH, and 100 $sgtUSDC per $BGT emitted to the gauge
  • A validator who emits 0.5 $BGT to the gauge receives 0.5 $wBTC, 5 $wETH, and 50 $sgtUSDC as a reward

To recap, anyone can provide incentives as long as...

  1. The gauge has at-least 1 whitelisted incentive pair (Example: 1 $wBTC per $BGT).
  2. The incentives provided meet a minimum incentive rate (defined per incentive asset).