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In this blog, we explain why we are implementing a Loyalty Bonus and provide a brief overview of how it is calculated.
Why have a Loyalty Bonus?
Voyagers experienced many twists and turns, with Swell continually evolving to capture new markets and growth – all the way from liquid staking with swETH to restaking with rswETH, and eventually Swell L2.
Those who stuck with us along the way deserve to be rewarded, regardless of the amount they staked.
For this reason, within the 8.5% of the SWELL supply allocated to the Voyage, 1.5% will be allocated to a Loyalty Bonus. The other 7% will be allocated linearly based on Pearl holdings.
How does it work?
The Loyalty Bonus takes into account both your earliness and your commitment to the protocol over time.
1. Earliness
Earlier Voyagers took the risk of joining a nascent protocol and provided contributions that were invaluable to our early growth.
For that reason, they get a higher weighting in the Loyalty Bonus. The weighting is determined by the month in which you started interacting with Swell, and increases exponentially from the end of the Voyage towards mainnet launch. This heavily tilts rewards to early Voyagers.
2. Commitment
In addition to the joining date, the Loyalty Bonus also takes into account continued participation.
To achieve this, the original weighting is multiplied by the difference in the amount of Pearls at the transition between each epoch. For example, if you earned 100 White Pearls in Month 1 and 120 White Pearls in Month 2, your multiplier for that epoch would be 1.2.
This number is normalized for increasing Pearl rates through the Voyage by dividing it against by the average ratio of the entire monthly change. A minimum of 1 is used to represent non-participation, with a maximum of 1.5 to cap outliers.
Summary
The Loyalty Bonus calculation can be summarized as:
Starting Bonus * monthly change ratio_1 * monthly change ratio 2 * monthly change ratio 3 = Loyalty
For example...
Alice bought $250 of swETH in Month 1 and stayed until Month 4, earning more Pearls each month by continuing to chase the most lucrative Pearl-earning opportunities.
58 * 1.2 * 1.3 * 1.4 = 127 Loyalty
Bob on the other hand bought $100,000 of rswETH in Month 14 and stayed until Month 15, but earned fewer Pearls in Month 15.
3 * 1 = 1 Loyalty
As shown, Alice's loyalty nets her a much bigger bonus than Bob — despite having deposited less ETH.
FAQ
Is the Loyalty Bonus impacted if I engaged with Swell from different wallets?
Yes, the Loyalty Bonus can only be applied to one individual wallet.
If you have engaged with Swell from multiple wallets without acting as a Sybil, then you will receive a Loyalty Bonus for each wallet.
Is the Loyalty Bonus impacted by the amount of assets that I deposited?
No, the amount of deposited assets has no bearing on how the Loyalty Bonus is calculated.
This is because the Loyalty Bonus is designed to reward early commitment and continued participation, rather than large deposits.
Is the Loyalty Bonus impacted by the total amount of Pearls that I earned?
No, the bonus doesn't take into account the total amount of Pearls earned.
It only takes into account the difference in the amount of Pearls earned between epochs.
