🌟Savvy STIP Rush

After careful planning and fine-tuning, Savvy is happy to introduce the full details of its 200,000 ARB distribution under the Arbitrum Short-Term Incentive Program (STIP). Each part of the distribution is designed and carefully calibrated to directly enhance a certain part of the Savvy Flywheel.

This section will be kept up to date as a central knowledge hub during the STIP reward emission period.

Overall: Sustainable Deployment of Incentives

Understanding the mercenary nature of directly incentivized liquidity pools (LP) based on our experiences from the STIP co-incentives received from ecosystem partners over the last two months; Savvy is adopting a much more nuanced strategy toward a sustainable liquidity framework.

Savvy’s STIP plan involves moving a substantial part of its LP incentives into other solutions that are modeled to have significantly higher return-on-emissions (ROE), generate higher protocol-owned liquidity (POL), and increase collaboration and transaction volume within the Arbitrum ecosystem.

Savvy’s STIP grant will be deployed under three key areas; on-chain bonds, STIP Booster incentives, and direct LP incentivization to keep up with the increasing volume through svToken liquidity pools.

By carefully balancing incentives, Savvy aims to load-balance market dynamics on SVY and svTokens while driving value and utility within its entire ecosystem by ensuring attractive APRs for liquidity providers, deepen the SVY-ETH liquidity pool through the bond program, and increase the utility of SVY token.

Here’s a closer look at the rationale behind STIP and how it plans to elevate the Savvy ecosystem:

Savvy's STIP ARB allocation drives a sustainable deployment of incentives

SVY-WETH LP Bond Program with Sushi

At the forefront of STIP is a pioneering collaboration between Savvy, Sushi, Bond Protocol, and Steer Finance involving SVY-WETH Liquidity Pool (LP) bonds, as Savvy will be one of the few select projects that will debut the first oracleless, dynamically priced bond product on the market.

The parameters of this program have been carefully modeled and tuned with the help of multiple think tanks, including Serious People and the Savvy team.

Under this program, participants can provide SVY-WETH LP tokens and get ARB at a discount from the market rate. These bonds will have a 7-day maturity window (the allocated ARB will be available for claim after 7 days). To engage in the bond program, participants will need to pair equal monetary amounts of SVY and WETH on Sushi, creating LP tokens that can be bonded through Sushi’s interface for discounted ARB.

This opportunity is particularly appealing for those looking to acquire and hold ARB long-term at below-market rates. The program has a cap of 115,000 ARB, and once the cap is reached, it will terminate.

Further details of the bond and a 'how-to' will be published here when the program goes live.

STIP (ARB) Booster

In addition to the Savvy Booster that rewards users in SVY tokens, Savvy has built another booster that rewards in ARB and allocated 40,000 ARB to it to be disbursed by March 29th, 2024.

STIP Booster uses the same Savvy Booster formula; however, it only considers veSVY earned from February 5th 00:00 UTC onward during reward calculation to create a level playing field for new users and has a different emission rate. On average, 770 ARB tokens will be emitted every day until the end of the program.

This additional booster aims to directly increase the number of credit lines taken out from the Savvy protocol and the number of SVY tokens staked.

STIP Booster Formula

In a simple explanation, the ARB a user will get will be a ratio of the product of their debt and claimed veSVY to the product of the total protocol debt and total claimed veSVY. Both Boosters calculate rewards based on claimed veSVY so don’t forget to claim frequently!

The mathematical formula is shown below:

$R_{ARB}:$ Your ARB rewards

$D_{you}:$ Your debt

$D_{total}:$ Total protocol debt

$E:$ Rate of ARB emissions

$T:$ Elapsed time

$R_{ARB} = \frac{\sqrt{D_{you} \times veSVY_{you}}}{\sqrt{D_{total} \times veSVY_{total}}} \times E \times T$

Claiming Earned ARB

Currently, the My SVY page shows the amount of rewards earned and the APY a user is getting. These numbers are actual numbers and are being calculated by Savvy on an ongoing basis. The claim function is currently being developed and will go live in the third week of March 2024.

APY Calculation

The % APYs shown on the My SVY page are based on the total deposits under the Strategies a user has.

Additional LP Rewards

45,000 ARB of Savvy’s STIP grant is allocated to further incentivize LPs across five key liquidity pools on Uniswap, Balancer, and Camelot. These rewards are in addition to the SVY rewards shown under the LP Rewards page. This comprehensive approach seeks to deepen liquidity and enhance the overall health of the Savvy ecosystem as the system capacity increases due to the bond program and the increased firepower of the Savvy Booster and STIP Booster. As with the rest of the STIP emissions, these amounts will be distributed by March 29th, 2024.

The distribution of the LP Rewards across is:

Pool		Amount
SVY-WETH	Uniswap	9,000 ARB
svUSD-FRAX	Uniswap	9,000 ARB
svETH-frxETH	Uniswap	9,000 ARB
svBTC-WBTC	Camelot	8,000 ARB
svUSD-svETH-svBTC	Balancer	10,000 ARB

Conclusion

Savvy’s strategic and novel implementation of STIP, starting with the bond program in collaboration with Sushi, represents a thoughtfully designed effort to enhance the platform’s liquidity and trading dynamics. Through this program and its associated initiatives, Savvy is looking to kickstart the flywheel that would provide a robust and sustainable ecosystem that benefits all stakeholders.