Incentive layer
Last updated
Last updated
Over recent months Contango has become the Bloomberg terminal for ongoing rewards in DeFi, as it surfaces all rewards that can be accrued by trading specific assets. This indeed showcased its utility as an incentive layer for many protocols, from lending markets to LRTs issuers or even chains. Instead of incentivizing their own assets or markets indiscriminately, these third-party protocols can direct rewards to specific instruments for a specific amount of time directly on Contango. By incentivising TVL by rewarding open interest on Contango, past experiences have shown that the ROI of these reward campaigns can be extremely efficient:
A chain could incentivize any money markets with a unique grant. E.g. Arbitrum incentivized money markets through $ARB, via an LTIPP grant, and obtained a 426x ROI with sticky TVL (source).
A chain could incentivize a specific segment, e.g. only incentivize ETH LSTs and LRTs on any of its money markets. E.g. Optimism incentivized LST/LRT trading though $OP, via the Superfest grant, and obtained a 443x ROI with sticky TVL (source).
A money market could incentivize trading on any chain or on a specific chain. E.g. Compound incentivized its Arbitrum markets with $ARB and obtained a 930x ROI with sticky TVL (source).
A token issuer could decide to incentivize, with a unique point deal, trading on any money market and chain. E.g. EtherFi, KelpDAO are incentivizing any money market and any chain trading of their assets (e.g. source).
For this purpose, a dedicated distributor contract has been developed by the Contango team. It allows any third-party protocol to allocate a given amount of rewards for a specific amount of time, to a specific instrument, side, market and chain. For instance, Ether.fi can choose to incentivize its eBTC pairs on ZeroLend, on the long side only, for 6 months.
Third-party protocols can benefit from ad hoc partnerships with Contango to receive a points multipliers in exchange for incentivizing their assets via Contango. Interested protocols can reach out to the Contango team for more details via Discord or Telegram.
