Earn OLIVE equivalent to the premium paid during market making
The Olive auction rewards program is designed with a clear objective of:
- 1.Incentivizing the market makers to provide liquidity for vaults
- 2.Enhancing APY for investors by maximizing premium per vault
The amount of OLIVE Tokens distributed to market makers is based on a formula that rewards a combination of the highest bid, i.e. premium paid and the number of option contracts for which the market maker provides liquidity. If multiple market makers have bid with the same (highest) premium, they all will qualify for the liquidity rewards.
The Cobb-Douglas function calculates how much OLIVE Token is rewarded to each market maker during an epoch.
Rewards, r is equal to
where w is equal to,
In essence, this allows market makers with the highest bid to farm OLIVE tokens equal in value to the premium they have paid in the auction process.
Who is eligible for auction rewards?
All market makers are eligible for auction rewards.
The Olive protocol is unavailable to users in the United States and other restricted territories.
When can we claim our rewards?
Auction rewards are computed and paid weekly every Friday. All rewards have a 90-day lock-up period followed by a 90-day release period with a daily vesting schedule.
Why is our auction reward less compared to the formula?
The total auction reward is capped at 100,000 OLIVE per 7-day weekly cycle. If the total rewards across all MMs for the weekly cycle is more than 100,000 OLIVE, everyone’s reward is scaled pro-rata such that the total rewards remain capped at 100,000 OLIVE per cycle.
What happens if the vault cycles are bi-weekly or monthly?
For DOVs where expiry is bi-weekly or monthly, the bid quantity of the highest bidding market maker is split equally among the number of weeks to calculate weekly auction rewards.