We foresee that it will be most difficult to attract a sufficient amount of stablecoins to keep up with the demand for borrowing with LP tokens as collateral. Therefore, Warp Finance decided to integrate a longer-term stablecoin liquidity provision incentive mechanism, called the Personal Rewards Curve.
This curve is individual to each user and takes the number of stablecoins provided and the length of non-harvesting of rewarded WARP into consideration. As users automatically harvest their rewards when they withdraw their provided stablecoins this system therefore also takes the length of liquidity provision into consideration. If a user harvests their WARP rewards the curve will reset and restart from the beginning. The maximum rewards will be achieved once a user does not harvest for 90 days.
This has several advantages:
Early liquidity providers can achieve the end of the curve quicker and are rewarded for taking higher risks early on.
Long-term and stable liquidity providers are key to the success of Warp Finance and are rewarded accordingly.
The decision of whether to withdraw stablecoins for an alternative opportunity on the market will not be a short-term decision anymore as this would reset the curve by harvesting. The longer people have committed in the past, the more stickiness Warp Finance will achieve with this structure.
Punishments over vestings. Token vesting structures often have a negative impact on the sentiment of investors, the price of unlocks and trader sentiment. Creating incentive structures that reward longer-term commitment but offer full flexibility is a more promising alternative.