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Incentive system

Camelot’s in-house incentive system, offering a robust, efficient, and user-friendly way to distribute rewards to liquidity providers. Built entirely by Camelot, this system integrates on-chain and off-chain components to provide flexibility for protocols and users to create custom campaigns tailored to their specific needs

Key Features​

  • Unified Incentive Distribution

    • Supports v2 and v3 (with plans to support v4/Integral in the future)

  • Permissionless

    • Any protocol can leverage the system, and it supports all tokens, including GRAIL and xGRAIL

  • Highly Customizable Campaigns

    • Features include Blacklist/Whitelist modes, token weight adjustments, depth-based incentives, and the flexibility to evolve over time

  • Deep Partners Integration

    • Seamlessly functions with Advanced Liquidity Managers (ALMs) and is compatible with any protocol providing liquidity to Camelot, ensuring the best possible user experience for their users

  • Streamlines reward collection

    • Unifies the harvesting of all incentives and emissions into one simple step

How the System Works​

The system is designed to handle reward distribution efficiently while allowing protocols to customize their campaigns

For instructions on setting up a campaign, refer to the campaign creation guide

Summary Explanation​

  • Campaigns are created and funds are fully managed on-chain
  • An off-chain script computes rewards for LPs
    • The script operates in 4-hour epochs, calculating rewards based on criteria specified during campaign creation
    • After each epoch, it generates a new Merkle root and corresponding proofs, which are uploaded on-chain
  • Users can:
    • Retrieve their Merkle proofs for eligible positions via our API
    • Claim pending rewards from the distributor contract at any time

Rewards Eligibility and Distribution​

Users simply need to provide liquidity to be eligible for rewards - no further action is required

  • V2 Pools
    • Rewards are distributed proportionally to liquidity ownership
  • V3 Pools
    • Rewards are distributed based on the exact amount of fees generated during an epoch
    • Unlike similar solutions, Camelot computes the precise fees generated for every position in every epoch, ensuring:
      • Extreme accuracy in reward calculations
      • Prevention of cheating or gaming the system
info

Example:
A user provides liquidity to the ETH/USDC pool

  • V2 Pools: The user owns 1% of the pool’s liquidity and receives 1% of the rewards.
  • V3 Pools: The user generates 2% of the fees and earns 2% of the rewards

Campaigns Customization​

  • Blacklist/Whitelist Modes
    • (V2 and V3) Use a blacklist to exclude specific addresses or a whitelist to include only specific addresses
  • Token Weighting
    • (V3 only) Assign weights to specific tokens, allowing rewards to depend not just on fees generated but also on the token composition of the position - this helps incentivize positions that hold more of one token over the other
  • Depth Criteria (WIP)
    • (V3 only) Incentivize or exclude positions based on price ranges
    • Use minimum or maximum liquidity depth to target specific ranges
info

A campaign for the BOOP/USDC pool with weights:
Fees = 70%, TokenA (BOOP) = 20%, and TokenB (USDC) = 10%, allowing rewards to depend not just on fees but also on token holdings, incentivizing positions with more BOOP

Campaign Fees and Requirements​

  • Tokens must be whitelisted to be used in campaigns
  • Campaigns must run for at least 24 hours
  • Campaigns must distribute at least ~$50/day to be considered valid
  • A 1% fee is deducted from the rewards to cover infrastructure costs
info

A protocol creates a campaign to incentivize the GRAIL/ETH pool. They choose already whitelisted USDC as the reward token. The campaign is set to run for 7 days, distributing $500 total, meeting the ~$50/day requirement. A 1% fee is deducted, leaving $495 to be distributed among liquidity providers

Partners and Integrations​

  • Advanced Liquidity Managers
    • Users providing liquidity to Camelot through integrated ALMs will receive rewards transparently and directly
    • Currently Integrated ALMs:
      • Gamma
      • Jones
      • Beefy (WIP)
      • Steer (WIP)
info

Example:
A user provides liquidity to Camelot through Gamma (an integrated ALM). The system automatically tracks their position, and rewards are distributed directly to their wallet without the need for a manual claim

spNFTs Migration​

  • Users holding liquidity in spNFTs will continue receiving rewards during the first month to ensure a smooth transition
  • spNFT rewards will stop on January 1st
  • Rewards won’t apply if the spNFT is part of a Nitro Pool
danger

We strongly encourage migrating liquidity from spNFTs before the deadline