With the benefit of hindsight, we believe that liquidity mining has been an unsustainable tool for protocols to rent liquidity from their users. The most valuable users of a protocol are incentivized to farm rewards and immediately sell the tokens they mine.
As a result we wanted to build a token distribution mechanism that:
- Rewards our most active borrowers and lenders
- Creates positive value for the protocol as a whole
As such, dAMM tokens will be distributed through a new mechanism we call, “Liquidity Bonding.” Liquidity Mining on dAMM does not pay out in the form of dAMM directly, but rather bdAMM. bdAMM can be redeemed 1:1 with dAMM, at a discount to the market price of dAMM.
- 75% of capital generated from bdAMM sales is restaked into dAMM Pools
- 25% is staked in the public insurance pool.