The Sushiswap protocol community recently announced how they would distribute the two-thirds of liquidity provider (LP) rewards locked for six months. The LP locked reward period began in the third quarter of 2020 and ended in March this year. The community has a Merkle distributor who will issue the $SUSHI rewards after users claim their gains on the Sushiswap UI.
The distribution technique, gotten from the Synthetix protocol, will involve a weekly release of earnings for the next six months. According to the protocol, LPs will receive payments every Friday, and the amount determined through its GitHub website. Additionally, users who do not claim their rewards weekly will have their profits added onto the following week, limiting the amount of gas fees.
Liquidity Provider Staking Rewards
Sushiswap also stated that they would pay gas fees for LPs whose earnings fall below 100 $SUSHI by giving them one of the tokens every month for free. Furthermore, the Sushiswap community announced that protocols that hit profits over $100K would not get their tokens directly. Instead, the tokens’ allocation will befall underlying Liquidity Providers.
Last year, the protocol brought down block rewards from 1,000 to 100 $SUSHI, impacting it enough for Uniswap to surpass its TVL. Sushiswap’s total value locked at the time dropped from a massive $1.4 billion to $800 million. However, the token made an impressive comeback and currently has a TVL just above the $4B mark.
The protocol’s partnership with Yearn Finance in yield farming has also created a stir in the financial market, as the top-most yielding pool in the ecosystem is WETH-yveCRV-DAO. The CRV pool generates an annual yield of approximately a whopping 329%. It is an offer that many liquidity providers would not pass by as the profits are massive.
DeFi Protocols’ Growth
According to crypto analysts, the DeFi space is growing, but there are several mountains to climb to shape up on the global financial scale. A Chainalysis blog shows DeFi protocols hold over $26 billion within their networks. However, before the framework is mounted on the economic scene, financial watchdogs ought to put up laws to govern the use of DeFi systems.
Moreover, analysts are saying DeFi systems should find a way to function independently and away from the Ethereum network, which is clouded by depressing gas fees, majorly cutting down profits. The ETH network’s unscalable property has massively hurt the DeFi space, like rendering protocols vulnerable to attacks such as re-entrancy. DeFi still cannot handle the rising demand on the market currently, and the reliance on one ETH network is doing more harm than good.