Spring has come earlier this year!

Starknet is kickstarting the DeFi Spring incentives program. We are happy to announce that Nostra will receive an incentive allocation, denominated in STRK tokens, that will be shared with the Nostra Pools liquidity providers (LPs).

Let's delve into the mechanics of this distribution and what it means for liquidity providers (LPs).

Understanding the Distribution Mechanism

The incentive distribution process is designed to reward the most active and loyal participants in the Nostra pools.

The rewards, denominated in STRK tokens, are allocated based on users' activity on Nostra Pools.

Here's a breakdown of how it works.

Allocation Based on Activity

The first step in the distribution process involves monitoring the activity of LPs over a lookback period of two weeks - the same period as the Starknet DeFi incentive campaign.

During this period, Nostra calculates the share of each user's pool participation on a per-block basis.

This calculation is done by dividing each user's LP token balance by the total LP token supply at that block.

This approach ensures a fair and transparent allocation of rewards, directly correlating the incentives with the level of participation and commitment of the LPs.

Distribution to Nostra Pools

Nostra is set to receive STRK incentives for various STRK pools, determined by an objective function that evaluates KPIs indicative of organic user engagement, including trading fees generated and the total liquidity contributed.

These incentives will then be distributed to LPs across the respective pools, adhering to the same proportional allocation based on these metrics.

Users can earn STRK incentives by providing liquidity in these pools:

• STRK/USDC

• STRK/ETH

• ETH/USDC

• USDC/USDT

Example

Alice has provided $10,000 worth of liquidity in the STRK/USDC pool for two weeks. Since the launch of the incentive program, the pool has gathered $1m TVL in the first week and $2m TVL for the whole second week. Alice’s share of the pool is then equal to 1% in the first week and 0.5% in the second week.

Bob has provided $10,000 worth of liquidity in the STRK/ETH pool for two weeks. Since the launch of the incentive program, the pool has gathered $500k TVL in the first week and $1m TVL for the whole second week. Bob’s share of the pool is then equal to 2% in the first week and 1% in the second week.

Let’s assume a hypothetical total incentive budget of 10,000 STRK for the first two weeks with the STRK/USDC and STRK/ETH pools receiving 6,000 STRK and 4,000 STRK respectively.

Alice would then receive the following:

Bob would receive the following:

Claiming the Incentives

After the initial two-week lookback period, LPs can claim their STRK incentives based on their activity during the previous weeks.

The first round of STRK claims for Nostra Pools will be live on 7 March 2024, for activity starting from 22 February 2024.

The Impact on the DeFi Ecosystem

The introduction of STRK incentives on Nostra not only rewards existing LPs but also attracts new participants to the ecosystem, bolstering liquidity and enhancing the overall stability of the DeFi market.

By aligning rewards with user activity and mitigating risks associated with impermanent loss, Nostra is paving the way for a more vibrant and robust DeFi future. Join the DeFi Spring on Starknet by putting your capital at work on Nostra!