Market Participants & Incentives Overview

TELx Miners ("Miners") deposit liquidity reserves in TELx supported AMM pools and are delivered a “Liquidity Provider Token” (LP Token), denoting their proportionate ownership of the pool. After providing liquidity, miners earn fees from swaps through the pool proportionate to their share of the total liquidity. Miners then “stake” their LP token in the respective staking contract on the TELx portal, providing Proof of Liquidity over time in order to mine TEL according to the TELx issuance policy. Miners can capture their accrued fees at any time by removing their liquidity, and can claim TEL they have earned after their vesting schedule is complete.

TELx Miner Visualization

Liquidity Providers deposit liquidity reserves in TELx supported pools, completely independent of TELx or the Telcoin Application, earning fees proportional to their share of the pool on every swap. They earn no mining incentives and can come and go as they please. TELx is built on permissionless DeFi protocols and anyone in the world can be a liquidity provider.

Visualization of a Liquidity Provider

Users access TELx supported markets via intuitive products on the Telcoin Application, paying fees to liquidity pools on every TELx-powered transaction. Their orders are routed through TELx at the best aggregated rate across all TELx markets. When users participate as TELx Miners to the markets which power products they rely on in their daily lives, they effectively pay themselves instead of intermediaries and institutions.

Traders, not to be confused with users of the Telcoin Application, swap TELx pool assets independent from the Telcoin Application, paying a fee to the liquidity pool on each trade. TELx is built on DeFi protocols, and anyone in the world can trade TELx markets.

Swap Fees

Users and traders pay swap fees to TELx-native AMM liquidity pools on every transaction. Fees typically range from 0.04 to 0.30 percent, depending on the DeFi Protocol. Miners and liquidity providers claim their accrued fees when they remove their liquidity from the pool.

AMM liquidity pools are theoretically designed to self-improve with increased usage according to the below flywheel.

Flywheel between increased usage and liquidity

TELx Issuance 

In V1, TELx miners provision self-custodial exchange liquidity to AMM liquidity pools in order to power two user-owned, decentralized exchange products for users of the Telcoin Application, earning issuance incentives when they stake their LP token on the TELx portal.

TELx issuance is designed to:

  • Bootstrap a diverse network of liquid, self-custodial, decentralized exchange markets for end users of the Telcoin Application.

  • Decentralize TEL ownership to long-term oriented users who provide durable and quantifiable value over time to the network.

  • Self-sustain over time without issuance by initiating the following flywheel between increased liquidity and volume.

Positive, self-reinforcing feedback loop between liquidity and trading volume.

TELx Issuance V1

In V1, each supported TELx Market is allocated a fixed amount of TEL issuance incentives per month, and individual Miners earn a share based on their percentage of total liquidity staked over time. Navigate to the SMS Network and TELxCHANGE staking portals to review the various incentivized liquidity pools across TELx today.

Future TELx Issuance

As TELx grows, new fee types, mining rewards, and incentives mechanisms will be introduced to users in order to optimize existing products and enable additional use cases and functionalities for end users of the platform. The above incentives are subject to change at Telcoin’s sole discretion and are likely to evolve.

Useful Articles about Liquidity Mining

Liquidity Mining: A User- Centric Token Distribution Strategy by Dmitriy Berenzon

Comparing Liquidity Mining and Proof of Work by Deribit Insights