💸Incentives

A significant advantage to PerfectSwap is its ability to facilitate the capital-efficient and user-friendly bootstrapping or deepening of liquidity through the use of incentives. PerfectSwap has built-in support for two types of incentives, voter incentives and LP incentives.

Voter Incentives

Voter incentives are payments made directly to vePRFCT holders on a pro-rata basis. These incentives encourage voters to cast their votes in favor of pools that have voter incentives attached. The rationale behind this is that when a voter supports a pool with a voter incentive, it enhances their voting Annual Percentage Rate (APR). Consequently, this leads to the allocation of PRFCT emissions to those specific pools, further incentivizing the liquidity and participation of the community.

LP Incentives

PerfectSwap also allows for LP (Liquidity Provider) incentives, which offer an efficient way to bootstrap liquidity in any whitelisted token. For instance, let's consider a scenario where Protocol Y aims to deepen liquidity in the Y/wETH trading pair but wants LPs to directly earn Y tokens rather than PRFCT. In such a case, Protocol Y can accomplish this objective by creating LP incentives with token Y as the incentive. This approach allows Protocol Y to attract liquidity providers who will contribute to the Y/wETH pool while earning Y tokens directly as rewards, thereby fostering liquidity growth in the desired trading pair.

In essence, PerfectSwap's support for both voter and LP incentives provides flexibility and accessibility for protocols seeking to enhance liquidity on the platform, allowing them to tailor their incentives to their specific goals and preferences. This approach encourages a vibrant and dynamic ecosystem of liquidity providers and voters on PerfectSwap.