Proposal for amending the yield farming mechanics (4/5)

PROPOSAL 4 - VALUING THE TIME SPENT IN LIQUIDITY POOLS Proposal 4 does not depend on other proposals and can be voted separately.

Incentivizing LP’s to stay in the liquidity pools as long as possible is also key for securing enough liquidity and preventing PNG dumps. Hence in each pool, the reward factor of each LP should be increased by for each day spent in the liquidity pool.

Below is a numeric example for further clarity:

Lets assume that PNG-ETH Pool distributes 100PNG per day.

There are 3 LP’s in this pool who have provided 1000 PNG over last 100 days.

Each day spent in the pool is valued with an additional 0.02% reward factor.

In this scenario, the reward per LP is follows (See https://gov.pangolin.exchange/t/proposal-for-amending-the-yield-farming-mechanics/838 for the table format)

PNG liquidity provided Duration in LP pools Reward factor Total Reward Factor Reward weight PNG Reward A B C = (1+0.2% x B) D = A x C E = D / Total D E x PNG reward bucket LP1 200 100 days 1+0.2%100=1.200 240 22.92% 22.9226361 LP2 300 10 days 1+0.2%10=1.020 306 29.23% 29.22636103 LP3 500 1 day 1+0.2%*1=1.002 501 47.85% 47.85100287 TOTAL 1000 1047 100.00% 100

Everytime an LP adds liquidity a new row will be added in the table as it would have a different time stamp. When withdrawing the liquidity, the last injected amount should go out first, or in other words first in last out (FILO)

It is also important to have a cap on the reward factor to balance the effect. I propose to cap it at 1.5 which can be reached in 25 days.