Gauges

What role gauges play in Monadium?

Gauges in Monadium are mechanisms that determine how liquidity incentives and rewards are distributed among different liquidity pools on the platform. They are a part of the broader DeFi ecosystem, often used in protocols to manage the allocation of emissions to various liquidity providers.

How Gauges Work in Monadium:

1. Voting Power Allocation:

• Monadium uses a vote-escrowed token system, where users lock their $MNDM tokens (native token) to receive $veMNDM tokens. These $veMNDM tokens represent the user’s voting power within the platform.

• Users can then vote with their $veMNDM tokens on specific gauges, indicating where they believe the liquidity incentives should be directed.

2. Gauge Voting:

• Each liquidity pool on Monadium can have its own gauge. For example, there could be a gauge for the MNDM/USDC pool.

• By voting on a gauge, users influence the allocation of liquidity rewards to that specific pool. The more votes a gauge receives, the larger the share of emissions (rewards) it will distribute to liquidity providers in that pool.

3. Reward Distribution:

• The rewards distributed to a liquidity pool are proportional to the votes its gauge receives. This means that pools with more voting support from $veMNDM holders will attract more rewards, incentivizing liquidity provision in those pools.

• This system ensures that the distribution of rewards is aligned with the interests of the Monadium community, as it reflects the collective preferences of $veMNDM holders.

4. Flexibility and Incentives:

• Gauges provide flexibility in how rewards are distributed. Projects or liquidity providers can lobby for votes to their gauge by offering bribes or additional incentives, which can further influence the allocation of $veMNDM votes.

• This creates a dynamic and competitive environment where different pools aim for community support, leading to efficient capital allocation across the platform.

Benefits of Gauges in Monadium:

• Decentralized Decision-Making: Gauges empower the Monadium community by giving them a direct role in deciding how rewards are distributed. This democratizes the incentive structure and aligns it with the interests of the users.

• Efficient Capital Allocation: By directing rewards to pools that receive the most votes, Monadium ensures that liquidity is allocated where it is most desired by the community, improving overall market efficiency.

• Enhanced Engagement: The gauge system encourages active participation from $veMNDM holders, as they can influence which pools receive more rewards, fostering a more engaged and invested community.