Incentives for Liquidity Providers
Last updated
Last updated
It is highly recommended to learn the concepts of Decentralized Exchanges, Automated Market Makers (AMM), Impermanent loss, Liquidity pool, Concentrated Liquidity in detail before reading this article.
It is an option to get extra LOCUS tokens by providing liquidity to the LOCUS-ETH V3 pool on Camelot Dex.
The amount of incentives an individual investor receives depends on the total Liquidity pool size, so that the amount of tokens allocated for incentives is divided proportionally among all liquidity providers.
Example: If 10 thousand of Locus tokens are allocated for LP incentives for a month, and you have 1% of all liquidity in LP, you will receive 1% of 10 thousand tokens monthly, that is 100 tokens.
Camelot is an ecosystem-focused, community-driven DEX on the Arbitrum blockchain. Their AMM operates similarly to Uniswap v3, with a range of custom features that enhance efficiency and performance.
One of those features is concentrated liquidity - the defining idea of Uniswap v3. Concentrated Liquidity enables liquidity providers to concentrate their capital within specific price ranges, leading to increased liquidity at preferred prices but it also brings several challenges like increased impermanent loss for liquidity providers.
Gamma is an automated infrastructure on top of Camelot, which manages liquidity for the liquidity pool.
The use of Gamma allows to achieve the most optimized performance on liquidity pool. Gamma does this by mitigating impermanent loss and accumulating fees using strategies. With Gamma, it is also possible to pay incentives for liquidity providers.
To use Gamma you should select the Auto mode on the page of adding liquidity.
