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Liquidity Incentivization

Liquidity Incentivization Problem

  • Most protocols in DeFi require a certain amount of liquidity for one reason or another.
  • However, the current solutions to incentivize liquidity come with their tradeoffs and pitfalls:
    • Pool 2 Emissions (i.e., attaching a reward to staked LPs) can be expensive to maintain and often lead to "farm and dump" situations that result in "unstable" liquidity.
    • Protocol-owned liquidity can be expensive to bootstrap and can only be occasionally necessary rather than a continuous foundation.
    • Bribing voters in the CRV/CVX system can be expensive as incumbents have a significant lead. Additionally, certain pools are restricted.

Introducing Helios

  • Helios addresses these issues and offers an attractive alternative solution by tackling the core issues in Solidly and supplementing its improvements.
  • Solidly's essential innovation is adjusting the number of protocol emissions with generated fees, not just liquidity. To do this, it will allow protocols and other significant stakeholders to become "voters" of veNFT, using their locked voting rights to direct emissions in the future and levy fees from the groups they have voted for.
  • Helios has made some improvements to the Solidly codebase, all carefully chosen to ensure that the protocol will perform as intended, allowing voters to compensate LPs for temporary losses fairly.
  • Solidly has some significant issues that have hindered its success in the Fantom ecosystem.

Improvements

Improvements in Helios include:
  • Attaching rewards to emissions
  • Ensuring Gauge efficiency
  • Extending emissions decay
  • Supporting White-Glove.