Lifinity’s revenue is the sum of protocol fees, trading fees generated by our POL, and the market making profit (MMP) that is withdrawn as profit.
MMP is the total profit and loss from market making and is measured by comparing the total value of a pool’s assets (excluding trading fees) to their value if they had not been traded and instead were just held. While Lifinity never takes MMP from LPs, when the POL for a pool is greater than its target liquidity, Lifinity treats its POL’s MMP as revenue if it is positive.
Revenue is in the form of LP tokens. The two tokens within an LP token are used for different purposes, so it is convenient to refer to them as the buyback token and the reward token.
In general, stablecoins are the buyback token. During the first year, all buyback tokens are used to buy back LFNTY. After the first year, 80% of buyback tokens will be used to buy back LFNTY and 20% will be used to fund ongoing development.
Reward tokens (SOL, BTC, ETH, etc.) are distributed pro-rata to veLFNTY holders on a monthly basis based on hourly snapshots of veLFNTY balances.
For the motivation behind this design, please see our Medium article on this topic.