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Bribes

Bribes are incentive rewards given by protocols to increase liquidity for their token. The main objective of bribes is to attract more users to a specific . [1]

Overview

The term "bribes" in the context of was indeed popularized by users of . Bribes are given to governance token holders of the platform where protocols have their tokens in a . These token holders have the power to vote for their liquidity pool, and more votes mean more emissions earned by the pool, resulting in higher rewards. [1]

holders, such as those holding Curve's tokens, have the power to vote on which liquidity pools receive more emissions. More votes for a pool result in higher emissions and, consequently, higher rewards for those providing to that pool. Protocols seeking to boost the liquidity of their pools offer bribes to these voters to secure more emissions. By offering these bribes, protocols can effectively ensure that their liquidity pools attract more liquidity, as the increased emissions lead to higher , which are attractive to liquidity providers.[3]


Essentially allow some users to incentivize other users for a certain behavior during a certain period of time by giving bribe to whoever commits to that behavior in that period. As an example, Thena is a popular on the that is using the concept of to attract more liquidity to its pools. is a major protocol on Thena who owns most prominent , and pools. At each period (each week), Thena, like , offers new emission of its coin to (LP’s) on each pool relative to how important the pool is. The importance of each pool is decided through community voting in the preceding period. influences this community decision by assigning bribes(in the form of FXS token) to whoever votes for the importance of its pools. Thereby hoping to attract more LP’s to its pools.[8]

DeFi Bribes Examples

MIM - Abracadabra

During the , one notable user of bribes was $MIM, the native stablecoin of , a money-market protocol created by Daniele Sesta. The primary goal of $MIM was to become the leading cross-chain , requiring deep liquidity pairs and extensive usage. To achieve this, Abracadabra heavily incentivized $veCRV holders to vote for (LPs) that utilized $MIM. This strategy had two significant effects:

  1. Increased Liquidity: Trades involving $MIM became extremely liquid, which was crucial during periods of high on-chain activity. This high liquidity ensured that traders did not suffer from slippage and helped $MIM maintain its peg.
  2. Profitable LP-ing: Providing liquidity for $MIM pairs became highly profitable and virtually risk-free, offering not only trade fees but also substantial rewards from directed emissions.[2]

veWOM - Wombat Exchange

wiki
Exchange utilizes a Voting system that allows protocols to list tokens on the platform to enhance their liquidity. These protocols provide incentives to encourage users to vote for their pools. Only $veWOM users can vote, and increased votes for a pool lead to higher WOM emissions, which in turn boosts the pool's and overall liquidity. Through the voting gauge mechanism, and protocols can bribe veWOM holders to vote for their pools or build positions in yield-boosting protocols to influence Wombat’s gauges.[4]

In December 2023, and joined forces to increase the use of on the aiming to increase FRAX stablecoin adoption and liquidity on BNB Chain while giving Wombat users more yield opportunities and options. Following the collaboration, FRAX was included in Wombat’s Innovation Pool, where WOM emissions would be given as a liquidity incentive to support the pool. Once the voting is active, users may receive bribes by casting their votes for the FRAX . [5]

Fraxtal Incentive Program

On March 11, 2024,   the  built by  launched their bridge to the public, marking a significant step in Fraxtals’s transition to becoming a Superchain. Fraxtal is a Modular that was launched on Feb 7, 2024.

Fraxtal has set up a couple of unique incentive programs. Fraxtal Blockspace and faxtal Point System.

  • The Fraxtal Blockspace Incentives system(Flox): Frox is the primary automated, recurring method that rewards both users and developers on Fraxtal. Every epoch (initially 7 days), EOA addresses that have spent gas on Fraxtal and the smart contracts that used gas are rewarded. FXTL points proportional to the “Flox Algorithm.”

  • The Fraxtal Point System(FXTL): Fraxtal has also introduced its own points system which is a unique ticker representing points within the Fraxtal ecosystem. It rewards and incentivises participants in the ecosystem including creating and interacting with , utilizing new protocols deployed to the chain, and holding specific types of tokens. FXTL points will be tokenized no later than 12 months after the Fraxtal chain genesis. Whether FXTL points will be tokenized as a separate staking token for the chain or converted to FXS tokens at a specified ratio will be revealed in the future. [6][7]

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Bribes

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September 16, 2024

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