Liquidity Mining

Fee-based Liquidity Mining

In a concentrated liquidity protocol, only the liquidity in those positions with active price ranges could be used by transactions, thereby being able to generate transaction fees. The transaction fee performance of a liquidity position reflects its effectiveness and contribution to the protocol. Therefore, one of the most special characteristics of the liquidity mining of Hyperion is that it will distribute its mining rewards to users according to their actual fee performance, instead of based on their liquidity amounts. This requires more active participation if a liquidity provider wants to earn more fees and mining rewards.

As the mining rewards are linearly released, every time there is a new transaction to be executed, the contract will be called to calculate the proportion of fees generated by every single position to the total generated fees of the pool since the last call. The released rewards will be distributed accordingly proportional to each position's generated fees.

This fee-based mining mechanism ensures that the mining rewards will not be diluted by those inactive LPs or users who deliberately allocate liquidity in an invalid price range just for sharing mining incentives. It greatly saves the cost for both the protocol and third party project owners on incentivizing liquidity, which makes the TVL of Hyperion more efficient than other DEXes.