Most Liquidity-Mining based projects focus on aggressive early inflation to create fomo and attract short-term high-risk high-reward capital.
The problem is, once the aggressive rewards dry up, the LPs "rotate crops" and farm yield somewhere else.
As BCNs value proposition is not to be realized in the short-term, but looks to iterate towards a long-term viable design, we need a reward scheme that aligns with that perspective.
Investing into BCN in the beginning is high-risk with a long-term high-reward expectation.
It is important, that liquidity stays with the project for a long time so it has time to grow organically and create solid foundations that prepare it for the kind of large-scale ambition it has
Therefore, the goal is to create a liquidity stock that is stable and predictable over long periods of time. To create requisite inertia in that capital stock, incentives should focus on rewarding long term investments.
One way to incentivize long-term investment is to hard-lock the liquidity and give rewards accordingly. Example of this is DeFi Swap b Crypto.com.
Pro:
Con:
*mechanisms that resolve this tend to disincentivice later investments
Instead of making the user choose how long they want to stake in the beginning in a hard-lock mechanism, a soft-lock allows the user to exit the pool at any time. The inertia to exit is created with a steady increase of rewards over time. An example of this would be Geyser from Ampleforth.
Pro:
Con:
**Depending on how the mechanism is designed, there might(!) be a possibility, that it doesn't feel rewarding for a user to add new liquidity over time and build up his position.
$$ w_{new}=\frac{t_{now}-t_{start} }{t_{max}}*w_{max} $$