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Dual Governance

Multiswap's innovative new dual governance model leverages the general staking rewards model to ensure rewards flow fairly and efficiently to participants who contribute to the protocol’s stability and growth.

Key Participants​

The dual governance model involves two key participant groups:

  1. Liquidity Providers: LP token holders stake to determine target weights of assets in the pool, i.e. the target weight of an asset is the percentage of LP tokens staked to that asset. By staking LP tokens to an asset, users earn boost rewards and transaction fees in that asset for real organic yield.

  2. CAV Holders: CAV holders stake to determine the allocation of emissions. The proportion of staked CAV tokens to an asset dictates the share of total emissions directed to that asset. This allows governance participants to dynamically adjust incentives based on market conditions.

Incentives​

As described in the staking rewards model, anyone can send rewards to the system, enabling both internal and external strategic incentives that vest over time. Multiswap utilizes this powerful flexibility for the following incentives:

Emissions & Boosts​

To help attract liquidity providers and bootstrap TVL, CAV token emissions and other boosts from strategic partners in order to boost yields for liquidity providers and attract TVL.

Transaction Fees​

A key innovation in Multiswap’s dual governance model is the redistribution of transaction fees as staking rewards. Fees collected from swaps within the protocol are automatically allocated to stakers based on their participation. This ensures that rewards are directly tied to protocol usage.

Vesting Rewards​

As in the general staking model, rewards are not immediately claimable but enter a pending state, gradually converting into available rewards over time. Users who unstake before full conversion forfeit a proportional amount of their pending rewards, which are then redistributed to remaining stakers.

Advantages​

  • No Lockups or Rebasing: Avoids market distortion mechanisms common in other DeFi models.
  • Direct Incentive Alignment: Encourages long-term participation without artificial constraints.
  • Governance-Driven Emissions: Ensures rewards are directed where they are most effective.
  • Sustainable Yield Model: Staking rewards are tied to actual protocol usage and fees rather than unsustainable inflation.

Conclusion​

Multiswap’s staking rewards system represents a significant innovation in DeFi incentive design. By allowing LPs to influence target weights and CAV holders to direct emissions, the model creates a fair and adaptive rewards structure. This ensures long-term sustainability while maximizing incentives for active participants in the Multiswap ecosystem.