Good Morning All,
I was reading about the boost that a pool can get when having a pairing of BAL/uncapped tokens.
Does this boost only applies to the pool with all uncapped tokens? What if you only 2 of the 3 uncapped? Will you still get a boost? Thanks.
Most factors from the liquidity mining program actually apply to trading pairs, not to pools. For pools, the factor becomes a weighted average of the per-pair factors. For the sake of simplicity, let’s say there is a boost that exists for BAL/uncapped pairs, and that boost is a fixed factor of 1.5. The weights used for the average are the pairwise products of the asset weights in the pool. Then a pool that contains 40% BAL, 25% WETH, 20% WBTC, and 15% MKR would be evaluated like this:
BAL/WETH: factor=1.5, weight=0.4*0.25
BAL/WBTC: factor=1.5, weight=0.4*0.20
BAL/MKR: factor=1.0, weight=0.4*0.15
WETH/WBTC: factor=1.0, weight=0.25*0.2
WETH/MKR: factor=1.0, weight=0.25*0.15
WBTC/MKR: factor=1.0, weight=0.20*0.15
total_factor = sum_over_k(weight_k * factor_k) / sum_over_k(weight_k)
I get about 1.25 for the pool’s total factor, assuming the pairwise factor is 1.5. It doesn’t actually work like this - it’s a good deal more complex - but this is an easy representation of how a factor generally gets propagated through a pool while being evaluated for each pair.
Ah now I got it. I was confused with pool vs pair! Very good explanation!