Proof of Liquidity

Proof of Liquidity enables users to use LP tokens minted by Liquidity Pool for staking in Sunrise. It enhances the total market cap of staked assets to acquire and hijack the Sunrise network. This part is realized by x/liquiditystaking module.

However, the Proof of Liquidity ecosystem consists of modules x/gauge and x/votingreward to enhance the engagement of the users and sustainability of the ecosystem. It is not only for the security.

Gauge voting

Many DEXs have a gauge voting system to incentivize the liquidity providers. Typically the incentive is given by the inflation of the native token of the DEX, and it is not sustainable.

There is an example of Pancake Swap Docs

ve(3,3)

The model "ve(3,3)" is an enhanced version of the model "ve" by combining the idea of the model "(3,3)". It contains a gauge voting system with "ve" voting mechanism, but the novelty of this mechanism is that the voter for each pool can get a reward from the profit of the pool. This mechanism incentivizes stakers to vote for the pool which has the potential to get more profit.

Berachain model

• $BGT: Non transferrable token for staking.

• $BERA: Transferrable token for a fee.

The blog Flow of Value by Berachain is a good resource for understanding the model.

The important point of the model is

• By making the staking token $BGT non transferrable. It enables the utilization of the staking token purely for staking without the need for holding it for the fee.

• The inflation rewards will be distributed with $BGT token which doesn't lead to the dilution of $BERA token.

• There is no interest in dApps on Ethereum for the sustainability of the DEXs, whereas the dApps on Berachain are always interested in the engagement of Berachain PoL.

Sunrise model

The Sunrise model incorporates and builds upon selected historical developments and evolutionary trajectories within its underlying architecture and design principles.

• $SSR: Non transferrable token for staking.

• $SR: STransferrable token for a fee.

The flow will be like this:

• Some users mint LP tokens in the x/liquiditypool module.

  • They will get $SSR for the reward.

• Some users stake $SSR token in the x/staking module

• People who have voting power can vote for the pool in the x/gauge module which pool should get $SSR for the incentive for liquidity providers.

• The voter for each pool will receive the reward from the profit of the pool.

Sunrise PoL inherits the perspective of Berachain that "dApps that use Sunrise DA are interested in the engagement of Sunrise PoL".