Camelot’s new modular system beta launch

Context

Starting with the basics, incentives are used to deepen onchain liquidity and reward users, bootstrapping pools so that people can trade in a permissionless and decentralized way. Whilst this is a critical part of onchain activity, there are limited options for builders to incentivise liquidity in an efficient and customizable way. Camelot’s new incentive system has been custom-built to bring the best tooling on the market, directly to the Arbitrum community.

When Camelot first started, spNFTs and Nitro pools played a key part in the initial design, largely driven by the v2 AMM. Since then, the majority of the trading activity and TVL has moved over to the v3 AMM. Due to the much more sophisticated and complex nature of concentrated liquidity, incentivising pools is much more difficult than with v2. Until now, Camelot leveraged third party solutions to provide v3 incentives. Whilst these were a good temporary solution, they weren’t always reliable and did not support the full features needed.

The new incentive system has been designed to be efficient, easy to use, customizable, and modular. It makes the liquidity-providing experience better and simpler for users, whilst making it more accessible and dynamic for protocols to incentivise liquidity in whatever way they choose.

Key features

• Unified incentives distribution: covers v2, v3 and all future AMM pools.
• Streamlined user experience: providing liquidity and earning rewards has become simple and easy, without any additional action required
• Permissionless: every protocol can leverage it, and rewards can be distributed in any token
• Accuracy: the EXACT amount of fees generated for every position is computed rather than using estimates / “gameable” logic
• Highly customizable campaigns: designed to be modular and adaptable to optimize liquidity incentivization (BLs/WLs modes, token weight, min/max depth…)
• Deep partners integration: works with ALMs and can work with any other protocol providing liquidity to Camelot to have the better possible ux for their users

Flow

• Campaigns are created and funds are fully handled onchain. An offchain script is in charge of computing rewards for LPs
• The script works in 2-hours based epochs to calculate rewards based on different criteria specified during campaign creation
• After each epoch run, the script creates a new merkle root and the respective proofs are generated and put onchain
• Users can get their merkle proofs from our API for every of their eligible position, and can claim their pending rewards from the distributor contract at any time

For more details, you can head to https://docs.camelot.exchange/protocol/incentive-system

How to get started?

The new system is designed to make earning rewards even easier for liquidity provider:

1. When providing liquidity, the existing flow remains the same. Head to https://app.camelot.exchange/liquidity and provide liquidity to a manual or automatic pool.
2. If the pool has an active rewards campaign, you will automatically start earning the incentives to your position. This remains the same if there are 1 or 10 reward campaigns, making it easy for builders to give multiple reward tokens.
3. To claim rewards, simply go to https://app.camelot.exchange/positions and click “Harvest” on the new Market Maker button. This will harvest all available rewards across all positions.

It’s as simple as that. No worrying about spNFTs or Nitro pools, or needing to check an external website. You can now provide liquidity and earn rewards in the most streamlined way possible.

As mentioned above, existing manual v3 positions do not need to do anything to automatically start earning rewards under the new system.

Note: If you’re owning spNFTs, you’ll have to follow the below migration process first.

spNFT migration

spNFTs being deprecated, users with spNFT positions will have to go through a quick and straightforward migration process.

Note: if you are providing v2 or v3 liquidity manually, you do not need to change anything. You will automatically start earning rewards via the new system once it is live.

For users with spNFTs, you’ll simply need to unwrap your positions now to ensure you keep earning rewards. This can be simply done on the website on the positions page via the “Migrate Now” button. The migration is specifically about unwrapping the spNFTs, and it will not impact the underlying liquidity provided.

This process is for ALL types of spNFTs, such as v2 and v3 auto positions. Users simply need to unwrap and they’ll automatically start earning rewards from the new system.

Note: spNFTs will still be able to earn rewards via the new system for 1 month to give users time to migrate — we strongly recommend migrating as soon as possible.

From today, all existing spNFT rewards are migrated to the new system and distributed through it. We will progressively migrate all our remaining incentives (such as via Merkl) too over the next few weeks.

If you have any spNFT positions, please head over to the app to unwrap it now: https://app.camelot.exchange/positions?type=spnfts