Liquidity Mining Program

Introducing the Alkemi Liquidity Mining Program

Alkemi Network's incentive structure is designed with the institutional DeFi user in mind. The Liquidity Mining Program’s objective is simple: drive platform utility using network incentives and grow with a balanced composition of lenders and borrowers.
Liquidity Providers (‘LPs’) and Borrowers accumulate network rewards in the form of native Alkemi Network (‘ALK’) multi-utility tokens. Reward tokens are distributed according to participants' allocated capital in the Alkemi Earn markets across the 'Verified' (permissioned) and 'Open' (permissionless) digital asset pools. Prior to TGE, only the 'Verified' pool is active with four markets: wBTC, ETH, USDC, and DAI. At TGE, ETH and USDC markets are available within the 'Open' pool.
Further details on the program, including benefits and how to participate are outlined below.

Key Considerations

Alkemi Network has allocated ~70 million ALK tokens, 35% of its total token supply, to the Liquidity Mining Program as an incentive to drive Liquidity Providers’ participation on the platform. There are three key considerations for this program:
    1.
    Early Participation Alkemi Earn launched early 2021 with a curated group of Liquidity Providers. The curation naturally limits the amount of competition for the reward tokens and participants have access to greater rewards.
    2.
    Asset Deposit and Borrow The reward tokens are distributed formulaically based on the liquidity in each market. Lenders receive reward tokens based upon their proportional supply to the protocol. Larger deposits result in a higher token reward potential. Depositors borrowing other assets against their collateral receive additional token rewards. This incentivizes borrowing activity on the protocol.
    3.
    Deposit Duration (Total Time Value Locked) ALK token allocations are calculated on a per-block basis. The calculation takes into account the dollar value of assets deposited at each block. The longer a participant has assets deposited in the network, the greater the accumulation potential for ALK rewards.

ALK Token Supply and Reward Distribution

The Alkemi Network Liquidity Mining Program calculation and distribution parameters have been designed as follows:
REWARDS POOL CALCULATION
Total ALK Token Supply
200,000,000
Total Reward Allocation
35.00%
Mining Program Duration
4 Years
ALK Rewards / Year (% of total supply)
8.75%
ALK Rewards / Year (#)
17,500,000
Number of Blocks / Year (Ethereum avg.)
2,371,128
ALK Rewards Issued Per Block
7.38045352
REWARDS DISTRIBUTION CRITERIA
Participating Markets (Verified Pool)
wBTC, USDC, DAI, ETH (currently active)
Participating Markets (Open Pool)
ETH, USDC (active post-TGE)
Reward Allocation Ratio for Markets
Market Liquidity / Total Liquidity
Reward Breakdown in Each Market
50% Lenders
50% Borrowers
Vesting Duration
6 Months after TGE
TGE Target Date
September 2021
Please note the following in the above tables:
    Each year, 8.75% of Alkemi’s total token supply (17,500,000 ALK tokens) will be distributed to network participants as ALK reward tokens
    The actual number of reward tokens are calculated at every Ethereum block creation (i.e. 7.38045352 ALK tokens assuming a constant 13.3 second block time)
    In each market, the reward-based ALK tokens are split equally between lenders/borrowers
    Reward-based ALK tokens accrued to genesis liquidity providers prior to Alkemi Network’s TGE will carry a vesting duration of 6 months starting from the TGE date
    The ALK token reward accrual process is initiated by protocol participants at their Loan / Borrow effective date. All calculations prior to TGE will be carried out by Alkemi Network based purely on the individual's wallet transaction history and balance on a by-block basis

Sample ALK Token Reward Calculation (for illustration only)

Review the ALK Rewards Calculator, an interactive tool for current ALK yields and borrow/lend APRs based on most recent API data
The table below illustrates ALK reward allocations to lenders and borrowers in the DAI market. The calculations assume $36m USD total protocol liquidity split equally between six markets, including the four core launch markets in the 'Verified' (permissioned) pool and two markets in the 'Open' (permissionless) pool. Note: inputs are dynamic but assumed static for illustration purposes.
EARN POOL ASSUMPTIONS
Total Market Liquidity
$36,000,000.00
6 Active Markets
wBTC, USDC, DAI, ETH (Verified Pool)
USDC, ETH (Open Pool)
Liquidity Distribution Across Markets (presumed)
Equal split across 6 markets (16.67% each)
REWARDS SCENARIO: DAI MARKET
DAI Market Liquidity (16.67% of total pool)
$6,000,000
DAI Market Total Rewards / Block
1.2300755870
DAI Market Lenders’ Rewards / Block (50%)
0.6150377935
DAI Market Borrowers’ Rewards / Block (50%)
0.6150377935
REWARDS SCENARIO: DAI LENDER
Lender DAI Supply
$500,000
Lender DAI Supply / Total DAI liquidity
8.33%
Lender's ALK Rewards / Block
0.05125314946
REWARDS SCENARIO: DAI BORROWER
Total Outstanding DAI Loaned (presumed)
$1,000,000
Outstanding Loan Taken by Borrower
$200,000
Borrower DAI Loan / Total DAI Loan
20%
Borrower ALK Rewards / Block
0.1230075587

Participation Terms

For the 'Verified' (permissioned) pool, participants must complete the Alkemi Network KYC application process to use Alkemi Earn. Once their application is reviewed and approved, nominated wallets are allowlisted for participation in the 'Verified' pool as lenders / borrowers. For the 'Open' pool, there are no prerequisites for lending and borrowing. For both pools, participants earn reward tokens on a per-block basis for active deposits and borrows.
Please contact Brian Mahoney, CSO, at [email protected] to learn more.
LENDERS
    Deposit Amount: No minimum or maximum deposit requirements.
    Minimum Deposit Period: No commitment period. Deposited funds may be withdrawn at any time.
    Loan Type: High-yield, variable rate.
    Interest Rate: Liquidity Provider receives interest rate payment(s) from collateralized borrowers on Alkemi Earn.
    Protocol Fees: Alkemi Earn takes a 1% commission on interest earned from supplied assets. This is used to cover operating costs.
BORROWERS
    Collateral Requirement: Borrowers are required to deposit a minimum of 125% of their desired borrow amount as collateral in the Alkemi Earn markets. Deposits earn interest as well as ALK token rewards whilst allocated to the protocol.
    Duration and Repayment: Borrows can be repaid anytime. Once a borrow has been repaid, the account’s collateral can be entirely withdrawn or transferred.
    Algorithmic Interest Rate: Borrowers pay an interest rate according to the algorithmic rate determined by the protocol. This interest rate is re-calculated at each block. ALK tokens are earned by borrowers upon both borrowed and deposited assets.
    Liquidation: A borrowing account becomes insolvent when the Borrow Balance exceeds the amount allowed by the collateralization ratio. When an account becomes insolvent, other users can repay a portion of the outstanding borrowed balance in exchange for a portion of the collateral. This function carries a liquidation incentive — currently set at 10% (subject to change).
    Origination fee: Borrowers pay 0.1% of the borrowed amount as an origination fee, which is added to the total borrow amount in its respective currency.

Last modified 1mo ago