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Rewards
Rewards on the Algofi Lending V2.
Lending V2 changes the rewards model by disaggregating supply and borrow rewards to stem rehypothecation and encourage healthier markets. In V1, we've seen yield farmers loop supplying and borrowing of stablecoins to leverage their rewards and jack up the utilization rate without doing any organic market activity. As a result, other borrowers had to deal with unstable and artificially inflated interest rates in those markets.
To deal with this issue, V2 rewards follow a new construction.
  1. 1.
    Each market runs independent rewards programs.
  2. 2.
    Only the borrowing activity is counted towards user rewards calculation (on a pro rata basis)
  3. 3.
    Suppliers can earn rewards by minting bAssets and staking them in staking contracts, which run their own independent rewards programs (also on a pro-rata basis)
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