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$LT Rewards
$LT (Light Token) is the single utility token of the HOPE Ecosystem. $LT aims to power all protocols within the ecosystem and incentivize liquidity provision and governance participation.
To understand how $LT Rewards are distributed through the HopeLend protocol comprehensively, it is essential to have a good grasp of $LT Tokenomics, HopeLend Tokenization Model, and Gauge System of the HOPE Ecosystem.
All HopeLend participants will have the chance to receive $LT rewards by interacting with the protocol through supplying and borrowing.
The following diagram shows the incentive allocation rate model.
Incentive allocation rate model
HopeLend incorporates a new incentive rate factor (
) in its classic veToken Model to calculate and distribute $LT rewards in a lending Pool, which is related to the fund utilization rate (
). As shown in the above diagram:
- The horizontal axis represents the fund utilization rate ()
- andare determined by the incentive allocation models.
- The vertical axis represents the incentive rate ().
- The green line shows the incentive rate for the depositors,
- The red line shows the incentive rate for the borrowers,
- At any time, the sum of the incentive rate of depositors and borrowers is always equal to 100%.
Different tokens have different optimal fund utilization rates and incentive allocation models.
Let's explore how the fund utilization rate (
) affects the incentive allocation rate (
):
-
When
is extremely low, depositors may withdraw liquidity due to low returns. Therefore, most rewards will be distributed to depositors to incentivize liquidity provision to avoid a significant reduction in liquidity in the pool.
As
increases, the incentive rate for depositors gradually returns to a normal level, while the incentive rate for borrowers increases accordingly.
-
In the medium range, the incentive rate of borrowers and depositors remains constant regardless of how
changes.
-
When
is high and continues to increase, available funds in the pool gradually decrease, leading to liquidity risk. Therefore, the protocol increases the incentive rate for depositors to incentivize more liquidity provisions and gradually decreases the incentive rate for borrowers.
-
When
is extremely high, even exceeding the Optimal fund utilization rate, borrowers will no longer receive $LT rewards, and all rewards will be distributed to depositors.
Last modified 4mo ago