The Evolution of Saga’s Reward System
Saga is expanding its approach to ecosystem rewards with the introduction of Vault 2.0. Building on the success of Vault 1.0, which effectively incentivized early stakers and contributors, Vault 2.0 reflects Saga’s commitment to sustainable growth and community engagement. This update not only adapts to the evolving needs of the ecosystem but also introduces a more balanced and inclusive reward structure.
Why Vault 2.0?
As the Saga ecosystem grows, so does the need for a reward system that goes beyond traditional staking incentives. Vault 2.0 is designed to support a vibrant DeFi ecosystem by introducing liquidity provision incentives alongside staking rewards. This strategic shift ensures a more comprehensive approach to ecosystem growth while maintaining fairness and adaptability for all participants.
Key Changes in Vault 2.0
Dual Vault Structure
Vault 2.0 introduces two distinct types of reward vaults:
Activity Vaults: These base-level distributions reward participation in specific activities such as staking and liquidity provision, regardless of loyalty level.
Loyalty Vaults: These rewards are calculated cumulatively across all activities, targeting participants who consistently engage over time. This approach encourages long-term involvement and rewards dedicated community members.
Staking Activity Vault
The Staking Activity Vault continues to incentivize staking while transitioning from the prominent role it played in Vault 1.0. The Vault budgets 200,000 Saga tokens per month (2.4M annualized) to reward stakers on top of the inflation-based staking rewards, helping to secure the network. Snapshot-based distribution ensures fairness and consistency in reward allocation.
Liquidity Provision (LP) Activity Vault
To support the growing DeFi ecosystem, Saga introduces the LP Activity Vault, which rewards liquidity providers on the Uniswap V3 instance on the “SagaEVM” chainlet. Key highlights include:
2,000,000 Saga tokens per month (24M annualized) as an additional incentive on top of the swap fees generated by liquidity pools.
Rewards are proportional to the swap fees earned, promoting balanced liquidity distribution across the network.
The system favors liquidity providers based on the amount, concentration, and uptime of liquidity, ensuring a dynamic and fair reward mechanism.
Loyalty Vault - Rewarding Consistency
Loyalty Vaults build on the historical loyalty calculations from Vault 1.0 but are expanded to include participation across all Activity Vaults. In the initial phase, loyalty calculations will focus on staking behavior, with plans to incorporate other activities as the ecosystem grows.
1,800,000 Saga tokens per month (21.6M annualized) are allocated to reward long-term engagement.
The Loyalty Vault encourages consistent participation, driving sustainable community growth and ecosystem activity.
Future Activity Vaults
Vault 2.0 is designed to be adaptable. As new activities like lending markets and intent solutions become available, they will be incorporated into the reward structure. Monthly token allocations will adjust dynamically, reflecting participation levels and other on-chain metrics to ensure balanced and effective incentives.
A New Era of SAGA Rewards
Vault 2.0 represents a significant step forward for Saga, signaling a shift towards a more dynamic and growth-oriented rewards structure. By rewarding a broader range of activities and emphasizing long-term participation, Saga is setting the stage for sustained ecosystem expansion.
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