Pollen Emissions

Instead of setting a fixed number of incentives which can often lead to excess inflation, or insufficient incentives to foster growth. POLLEN is only to be emitted when it is required to help drive NECT demand. These emissions come from the 37.4% community allocation.

Why do we even emit POLLEN

POLLEN sits at the intersection of two user types:

1. Leverage users — paying interest rates to borrow against collateral

2. Yield seekers — looking to earn on NECT (our stablecoin)

Finding the optimal balance between these two, where demand for leverage generates enough incentives to drive demand for Yield Seekers. With Proof of liquidity used as a means in which to increase the value of incentives through bribe mechanics (a $1 worth of bribes can equate to more than $1 worth of incentives emitted). Ultimately meaning incentives received by the Yiled Seekers could supersede that of what was originally captured, creating a relatively sustainable flywheel.

How this works practically:

• Value from Leverage users flows into PoL

• PoL emissions are routed to POLLEN vault

• Those vaults reward POLLEN stakers

• POLLEN is emitted to Yield seekers

• This drives NECT demand keeps capital sticky, aligned

• Enabling for more leverage and value flowing to PoL

How do we determine how much to distribute?

Daily loss to volume

Simply put, this ratio tells us how much NECT is being sold (negative pressure on peg) and then allows to determine 2 important factors: 1. POLLEN emission - to drive incentives to create demand for NECT 2. Interest rates - to recoup the value emitted back from borrowers creating sell pressure

The daily loss to volume ratio is 15.2% in the example above - we do this for all major NECT pairs

Example:

In the image above we would need to drive incentives to create buy pressure to the value of 15.2% of the total volume for NECT per day.

So if there was $1m in volume we would need to drive enough incentives to a NECT usecase (e.g. Liquid Stability Pool) that creates $152,000 worth of buy pressure for NECT. This also allows us to calculate how much we need to accrue to be used to incentivise the PoL rewards vaults to counteract the POLLEN that we emitted to drive the NECT buy pressure. All this to say that whenever POLLEN is emitted it is to further sustain the amount of NECT liquidity needed to facilitate the Leverage offered by the Beraborrow protocol creating the flywheel shown in the graphic. here