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Back in December 2021, we established a Tribaldex swap pool, SWAP.HIVE:SWAP.BLURT. The aim was to encourage more trading and facilitate arbitrage opportunities with the SWAP.BLURT open market.

You can see the pool, either on Tribaldex (just search for BLURT), or on Beeswap.

At the time, we were aware that Tribaldex was scheduled to add trading fees to its pools in January 2022, and we felt it was worth the experiment to see how much liquidity providers (LP'ers) could earn without any external incentives. There were already incentivised SWAP.STATE pools that, although not directly related to BLURT, have a considerable number of Blurt members as stakeholders. Interestingly, in the 6 months since pool fees were introduced, that SWAP.HIVE:SWAP.BLURT pool has allowed LP providers to earn over 22,000 BLURT in rewards!

However, with both BLURT and HIVE dropping in price since that time, we notice that the pool now has very low liquidity - currently about 265,000 BLURT equivalent. This means that swaps are seeing their slippage increasing, thereby decreasing their efficiency. Merely adding more liquidity will not alter this dynamic without a significant injection of funds. It is thus a more efficient use of our own funds to start offering pool incentives.

Having done some calculations, given the current pool TVL, we have added an incentive of 500 BLURT per day for 200 days, thus a total of 100k BLURT. This will give an immediate APR of about 70%, which seems generous enough to encourage further liquidity.

When the incentives were first added, the APR showed a return of about 68%, so pretty close to the calculated estimate. If you look at the SWAP.HIVE:SWAP.BLURT on Beeswap, you will see that the current calculation is about 55% APR - this merely shows that some users have already added more liquidity within the last day.

Just to go through some basic features for the benefit of users who may not be so familiar with swap pools, firstly, as users add more liquidity, that APR value will fall. However, there is also built in a 1% bonus for up to 100 days, so those early liquidity providers are compensated somewhat for the volatility in returns. LPers will also still receive a share of the swap fees as extra income - this is not paid out but rather appears in the value of your LP-tokens.

Also note that payouts are done once every 24 hours - known as an epoch - and that whenever you add some liquidity, your first payout will be at the end of the next epoch. For example, if you see the next payout is in 5 hours and you add some funds, then those new funds will receive their first payout after 29 hours, that is, 5 hours to the end of the current epoch plus 24 hours to the end of the next epoch.

As always, there are risks, and it is up to users to manage those risks. As the relative price of the two tokens fluctuates, so too does the value of the pool and the APR. The ideal situation is where both tokens rise in price so that the TVL increases. Also, if the price of the incentive tokens rises then so does the APR.

Indeed, one interesting innovation of the Tribaldex pools is that anybody can add any token as an incentive to any pool! This means that other token admins may use the pool as marketing for their own token by adding it to the distributed incentives. It is thus possible that the total APR may be higher than just the BLURT rewards.

Extending the incentives beyond 200 days will be considered during the last 30 days and shall depend on the effectiveness of the swap pool and feedback received. The key aim remains to maintain the swap pool as a viable alternative to the open market. Now, liquidity providers can also earn from supporting the pool.