💧Liquidity Pool & Incentives

The entire Bariff ecosystem is built on a carefully designed liquidity strategy, reinforced by various mechanisms and incentives that keep the protocol in constant motion and balance.

1. Liquidity Pools & Competitive Trading

The system operates through three primary LPs that will be live on Kodiak:

• CHINA/BERA (V3)

• USA/BERA (V3)

• CHINA/BERA (Stabilizer Pool)

1.1 Volume-Based Competition:

• The LP with the highest trading volume benefits from a buyback mechanism, reinforcing its dominance.

• The LP with lower trading volume is penalized via market selling of accrued fees for BERA.

• The CHINA/BERA LP acts as a stabilizer, absorbing volatility and offering arbitrage opportunities. Moreover, the Stabilizer Pool will receive the fees accrured on the BERA token, giving liquidity providers the opportunity to earn a high yield in Berachain's native token.

2. Fee Distribution & Incentives

2.1 Winning LP Rewards

• BERA fees → Used for buybacks of the winning token.

• Winning token’s own fees → Burnt, increasing scarcity and value.

2.2 Losing LP Penalty

• Losing token’s own fees → Market sold for BERA, adding sell pressure.

• No buybacks, no rewards for LPs in the losing pool.

2.3 CHINA/USA LP as the Balancing Force

• BERA fees from all pools are redirected as LP rewards to CHINA/USA liquidity providers.

• This mechanism stabilizes the system and ensures perpetual arbitrage opportunities.