dLP Locking (Dynamic Liquidity & Boost)

dLP Lockers govern over the protocol, earn passive yield and unlock LOOP emissions.

The LOOP token (and therefore the dLP) launches after the protocol.

The official governance token of Loop is the dLP, which stands for the dynamic Liquidity Pool token. The dLP token represents ownership in a locked 80LOOP-20lpETH Balancer Pool Token, a structure inspired by Radiant. This design ensures that LOOP liquidity scales in tandem with the protocols adoption and serves as a demand sink for lpETH.

dLP lockers enjoy several benefits, including:

• The Boost: Enables activation of LOOP emissions for leveraged restaking positions.

• dLP Real Yield: Entitles holders to a portion of the platform's fee revenue in ETH.

• Governance: Provides voting power for making decisions concerning the governance of the Loop protocol.

The duration of the lock can vary—1 month, 3 months, 6 months, or 12 months—with longer locks yielding a higher multiplier on real yield earnings. This multiplier remains in effect until the lock expires, after which the user may opt to automatically renew the lock or exit their position. Additionally, any yield accrued by the locked dLP can be claimed at any time without vesting requirements.

The Boost

Loopers maintaining a dLP value exceeding 5% of their Total Position Size qualify for LOOP token emissions to offset borrowing costs incurred from leveraging. The duration of the lock influences the dLP APR significantly, although it's not a requirement for eligibility. Importantly, the 5% threshold must be met across all looped positions collectively; it is not possible to activate the boost for individual positions alone.

Rewards

LOOP emissions obtained through boosting undergo a 90-day vesting period. This period features a progressively decreasing penalty for early withdrawals, starting at 90% and tapering to 25%, designed to incentivize participants to commit to the full duration to maximize their potential rewards.

Users opting to Zap their maturing rewards into the dLP must add 20% in lpETH and lock it along with their LOOP rewards for at least three months. This commitment not only generates the user platform revenue but also ensures continued eligibility for additional LOOP emissions.

Discqualification Bounites

Loop introduces a mechanism for users meeting the 5% dLP threshold to disqualify non-compliant users for a bounty by operating a liquidation bot. This disqualification system helps prevent accounts with expired dLP from illicitly collecting platform fees and stops underqualified users from receiving LOOP emissions.

Bounty hunters are compensated for relocking dLP for users with the "auto-relock" feature enabled and for executing auto-compounds for users who have opted for this feature. This approach promotes further decentralization within the protocol's operations, allowing users to eliminate non-compliant participants, thus benefiting both the protocol and themselves. To avoid disqualification, users should maintain or exceed the 5% dLP threshold. Disqualifications due to expired dLP locks can be circumvented by activating the “auto-relock” option on the Manage page, ensuring uninterrupted receipt of platform fees.

Real Yield

As specified, dLP lockers can choose a locking duration ranging from 30 days up to 360 days. It's important to note that the chosen locking duration does not influence the 5% threshold required to activate LOOP emissions for Loopers.

The locking duration, however, does significantly impact the multiplier applied to the real yield earnings of the dLP, which serves to further align incentives within Loop. The multipliers are structured as follows:

• 12-month dLP locks will receive a 25x multiplier on their real yield earnings, in comparison to 1-month locks.

• 6-month dLP locks will receive a 10x multiplier on their real yield earnings, relative to 1-month locks.

• 3-month dLP locks will receive a 4x multiplier on their real yield earnings, compared to 1-month locks.

• 1-month dLP locks will not receive any multiplier on their real yield earnings.

This tiered multiplier system incentivizes longer commitment periods, enhancing the potential rewards for those who opt for extended lock durations.

Governance

The Loop DAO will be established shortly after the launch of the protocol. Holders of dLP tokens have the right to vote on significant protocol decisions, including the approval of new collateral types and adjustments to existing protocol parameters. This governance function allows dLP lockers to contribute to the strategic evolution of the Loop protocol by participating in decision-making processes that affect its operation and development.