MDMA - Liquidity Book Incentives
Overview
Moe's Discretized Maker Awards (MDMA) is a novel and highly efficient incentive mechanism built on top of the Liquidity Book protocol that enhances the efficiency of concentrated liquidity whilst also providing a classic yield farming experience.
How does MDMA Work?
MDMA provides targeted incentives to liquidity providers, streamed in real-time to liquidity actively provided within the 'MDMA Range'. This MDMA range is a fixed radius around the active bin and is pool-specific, meaning each Liquidity Book Pool may have a different MDMA range, anywhere from 1 bin to a maximum of 11 bins.
Rewards are distributed proportionally based on liquidity. For example, if one bin has twice as much liquidity as all other bins in the MDMA range, it will receive twice as many rewards.
MDMA features an adaptive incentive mechanism. As the active bin changes with market fluctuations, the MDMA range adapts in real-time with price changes. Essentially, the MDMA range is a fixed range around the active bin, moving up and down with the price.
This incentivization mechanism enhances liquidity depth at current market prices, as all liquidity providers are directly incentivized to maintain depth in and around the active bin.
MDMA Features:
Enhanced Liquidity Depth: MDMA encourages Liquidity Providers to provide liquidity at and around current market prices, helping to improve swap efficiency for Traders.
Adaptive Incentives: Rewards move in real-time with the price in the Liquidity Pool, this helps to encourage optimal liquidity distribution as and when the price moves.
Pool-Specific Flexibility: Every Liquidity Book Pool can have a tailored MDMA Reward range, ensuring the right conditions can be fostered for optimal liquidity distribution.
Real-Time Rewards: Liquidity Providers can instantly earn rewards, without any delay unlike other existing incentive mechanisms on concentrated liquidity protocols.
How to Earn Rewards with MDMA
Step by step guide to get up and running
Navigate to an LB pool with MDMA rewards
On the Pools page, search for a LB Liquidity Pool you wish to supply liquidity for with a 'Rewards' tag.
Check the reward information to see the MDMA bin range
View the current price range for rewards based on the active market price. The quantity of bins in the reward range is also viewable, along with information on current reward amounts, total liquidity in range, and estimated reward APR.
Deploy liquidity within the MDMA range
Deposit tokens into the pool based on your overall LP strategy. Learn more about strategy here.
Deploy and manage your liquidity to maximize your earning potential from both trading fees + MDMA rewards. For more details on adding / removing liquidity from Liquidity Book, see our guide here.
Earn rewards!
Any liquidity you have deposited within the reward range will immediately begin accruing rewards.
The rewarded bin range will also be viewable on the 'My Liquidity' section once you have deployed liquidity, so you can easily see what portion of your liquidity is earning rewards.
Voting for Incentive Pools
MDMA plugs seamlessly into Merchant Moe's veMOE voting system, allowing MOE stakers to determine how rewards are distributed across different LB pools.
User can stake their MOE tokens to accrue veMOE voting power. veMOE holders can then vote to direct rewards to specific LB pools with MDMA rewards active. Voting pools will be opened up for LB pools, and operate the same as Moe Classic pools. The emissions mechanism reacts in real-time to changes in the voting distribution, and directs these emissions to each respective farm or LB pools.
Rewards sent to an LB pool will continuously flow into the incentivization range, and is shared between the liquidity providers based on their share of the overall liquidity in the range. Liquidity provided in LB pools will not require users to stake their LP tokens to farm rewards. $MOE rewards will automatically accrue when liquidity is in range and the rewards be claimable at any time.
Last updated
