To ensure the long-term sustainability of the liquidity, tokenomics, and governance of KMM, we introduce the concept of time-locking similar to that of Curve for both LP tokens and KMM tokens. Time-locking periods range from 1 week to 4 years.
To receive KMM tokens, liquidity providers must stake their LP tokens at the corresponding farms. After staking, liquidity providers can choose locking periods.
- 1-week locking corresponds to 1/52 veLP;
- 1-year locking corresponds to 1 veLP;
- 4-year locking corresponds to 4 veLP.
For example, if a liquidity provider locks 1 BNB-BUSD LP token for 6 months, he will receive 0.5 veBNB-BUSD. Over time, the veLP will decrease according to the formula:
KMM tokens are distributed to liquidity providers proportionally to veLP:
To the single staking vault of KMM token, the concept of time-locking is also adopted with the same formula to calculate received veKMM and rewards.
In addition, liquidity providers of LP can govern their own LP by tweaking their own LP’s parameters. In the beginning, 2 parameters can be tweaked by liquidity providers:
- transaction fee
The default values are maxSlippage = 5% and transaction fee = 0.3%.
Lower maxSlippage increases the concentration of the asset around the current market price and thus increases market depth, an option suitable to stablecoin swaps. Higher maxSlippage increases profitability to liquidity providers given the same trading volume.