How veANGLE can boost ANGLE rewards for LPs
- Liquidity providers staking on Angle can boost their ANGLE rewards by holding veANGLE.
- This boost can represent up to to x2.5 the base rewards an address without any veANGLE could get.
- To compute the boost, the total veANGLE supply of an address is applied to all the contracts this address is staking on.
Holding veANGLE give users more weight when collecting certain farming rewards. A big majority of the farming rewards that are distributed directly through the protocol are eligible for veANGLE boosts.
One notable exception is that of the rewards given to hedging agents taking part in Angle Perpetual contracts.
Besides, external farming that are promoted by other protocols (such as Sushi Onsen) or that are available on other chains are typically not available for veANGLE boosts since they are independent of the mainnet Angle protocol itself.
Angle forked its staking contract model (also called liquidity gauge) from Curve which has a similar boost system.
Basically, this staking contract considers that an address holding veANGLE is providing more liquidity than it really is.
In a given gauge, owning veANGLE increases a LP's share of the pool thus increasing the rewards received. As usual, LPs holding no veANGLE are considered as providing 100% of their liquidity. If an address owns enough veANGLE, the contract can consider that it brings up to 250% its original liquidity, or a x2.5 boost compared to the original 100%.
Then, this x2.5 multiplier in liquidity provided translates into a boost on rewards depending on the total liquidity provided in the pool and how it is considered by the boost calculator.
The complete formula to compute the liquidity the staking contract considers provided and therefore the boost applied is:
To get the max possible boost on rewards, an address needs to get 100% of its provided liquidity taken into account by the protocol. This is equivalent to having the term on the left greater or equal than the value of the liquidity provided:
An address having a higher share of the total veANGLE supply than its share of liquidity provided in the pool for which the boost is being computed is considered as having x2.5 more liquidity than an address with no veANGLE.
All gauges therefore have different requirements meaning some pools are easier to boost than others. In the end, it all depends on how much others have locked and how much the liquidity gauge has.
Now that we understand how veANGLE holders get a boost on capital compared to non-holders, let’s look at how this translates into an actual boost on rewards received.
Example 1: One holder of veANGLE with a big share of the pool:
- Address A and B are providing 100 of liquidity each in pool P.
- They are receiving 50% of the rewards each.
Now, let’s say that A owns the total supply of veANGLE.
- The boost calculator now considers that A bringsof liquidity to the pool.
- Address A now ownsof the pool, and address B 28.5%.
- Address A rewards multiplier is at x1.43 (from 50% to 71.5%).
Example 2: Two holders of veANGLE, with very different shares of the pool.
- Now say that address A provides 100 and address B 9900.
- If none of them hold veANGLE, they are respectively earning 1% and 99% of the rewards.
- Now let’s consider that A owns 1% or more of the veANGLE supply (i.e. as much as or more than its share of the pool).
- Again, the boost calculator now considers that it bringsof liquidity to the pool.
- Therefore, address A is now earningof the rewards, or a x2.46 multiplier.
- On the other hand, if B, which owns much more liquidity than A, had 1% of the veANGLE supply as well, its considered liquidity would go from 9900 to:
- Its share of earnings would go from 97.54% to:A very small increase compared to address A.
- In this situation, address A share of rewards and boost would go from 2.46 to:
Example 3: Introducing address C
Staying in example 2's situation, let's introduce an address C providing 2000 of liquidity. In this case, the considered liquidity for B and C becomes:
- Address B considered liquidity:
- Address C considered liquidity:
And address A, B, and C share of rewards become:
As expected from the formula, LPs owning a bigger share of the pool need to hold a bigger share of the veANGLE supply to significantly increase their boost. Similarly, the smaller the share of the pool owned initially, the bigger the increase in rewards.
Due to all the variables in the boost calculation, it is very tricky to do so manually and users should refer to our calculator on the DAO page.
Implementation details are such that a user's veANGLE balance used to calculate the boost is stored at the time of the last action or checkpoint within a liquidity gauge contract. This means that this user's boost could stay higher than it actually is with their current veANGLE balance. It has two main side effects.
On the one hand, after locking tokens, users need to call the deposit, withdraw (with amount > 0), or user_checkpoint() functions from the liquidity gauge (staking contract) to apply or update their veANGLE balance and boost. It’s therefore more gas efficient to lock ANGLE before depositing liquidity into a gauge.
On the other hand, as the voting power decreases with time, the liquidity gauge keeps considering the original, higher veANGLE balance than what users actually have, giving them a higher boost than they should. Therefore, it's at their advantage to apply a boost and do no further actions until they vote-lock more tokens.
However, once the vote-lock expires, everyone can “kick” users by creating a checkpoint for that address and, essentially, resetting their actual voting power and boost.