Fees and Rewards Distribution
Last updated
Last updated
Pendle employs a Boosting reward mechanism similar to Curve, where users can lock PENDLE tokens to acquire vePENDLE. Based on the proportion of vePENDLE held and liquidity provided, users can potentially receive up to 2.5 times in boosted rewards.
Due to the diverse sources of Pendle LP Rewards, both SY rewards and PENDLE incentives can be boosted, while the remaining rewards are compounded and accumulated within the liquidity pool without boost.
Equilibria utilizes accumulated vePENDLE to boost the rewards for users who provide liquidity through Equilibria, enabling them to achieve higher returns.
For Pendle, all LPs on Equilibria are considered as a collective entity. Pendle calculates rewards based on Equilibria’s vePENDLE holdings and the TVL of the corresponding pool, on a per-second basis. However, since claiming rewards requires initiating transactions on the blockchain, Equilibria opportunistically collects the corresponding rewards from Pendle during events such as deposits and withdrawals.
Upon receiving rewards from Pendle, Equilibria allocates a majority of the rewards to LPs and a portion as protocol fees to other protocol participants (with the current distribution being 77.5% to LPs and 22.5% as protocol fees). The rewards allocated to LPs are transferred to the Streaming Payout Distributor of the corresponding pool, where they are distributed to all LPs based on time and the LP's proportionate TVL.
Currently, rewards are distributed over a period of 7 days on a per-second basis. New rewards, combined with any remaining undistributed rewards, are then distributed at a new rate over another 7-day period from that time.
To ensure a stable distribution rate, if the new distribution rate is lower than the existing rate, the Streaming Payout Distributor continues to accumulate rewards until the new rate surpasses the existing rate. This mechanism draws inspiration from the Convex and Aura algorithms, primarily aimed at preventing TVL sandwich attacks and achieving smoother, real-time continuous rewards.
The distribution of EQB incentives is determined based on the amount of PENDLE earned by Equilibria. When users claim their PENDLE rewards, EQB is automatically claimed to their wallets in proportion to the PENDLE earned at the time.
Upon receiving rewards from Pendle, Equilibria allocates a portion as protocol fees and shares them among three participants: ePENDLE stakers, vlEQB holders, and the protocol treasury.
The protocol fees are first collected by each chain-specific Fee Collector. After collecting the fees, we adopt a consolidated reporting approach to combine the fees and then distribute them proportionally to the amount of ePENDLE and vlEQB across different chains. This is similar to how traditional conglomerates consolidate the revenues of different subsidiaries and allocate budgets based on specific circumstances. The benefit of this approach is that the APY of ePENDLE and vlEQB will remain chain-agnostic. Users can choose their preferred chain for usage without being concerned about varying APYs caused by separate operations on different chains.
Fees to ePENDLE are distributed every few days, following a similar logic and distribution method as LP rewards. This approach ensures smooth reward distribution and mitigates the risk of TVL sandwich attacks.
Fees to vlEQB are distributed on a weekly basis. Since vlEQB requires locking the original token, the protocol is safe from TVL sandwich attacks. The reward distribution for vlEQB is based on real-time vlEQB proportions.
Pendle distributes protocol revenue from YT fees to vePENDLE holders every 4-5 weeks. These fees are directly passed through to ePENDLE stakers, along with any other reward generated by vePENDLE.
ePENDLE stakers are entitled to receive EBQ incentives, which are determined by the amount of PENDLE they have earned, similar to the Equilibria LP Reward Mechanism. When they claim their PENDLE rewards, EQB is automatically claimed to their wallets in proportion to their earned PENDLE.
Every 4-5 weeks, Pendle distributes protocol revenue from swap fees to vePENDLE voters, depending on which pool they have been active. For example, vePENDLE holders who voted for pool GLP will receive all protocol revenue from the swap fees related to that pool.
In the case of Equilibria, the platform's vePENDLE voting is determined by vlEQB. Therefore, these rewards will be passed through to vlEQB holders who participate in the voting process.
