# Liquidity Incentives (3,3)

## The ve(3,3) Token Model

Mazu plans to implement a ve(3,3) token model to incentivize long-term $MAZU holders. The model combines elements of (3,3) game theory popularized by projects such as Olympus DAO and vote escro<mark style="color:purple;">w</mark> (ve) tokenomics used by projects like Curve Finance. The idea behind ve(3,3) is to create a token economy that better aligns the incentives of token holders, liquidity providers and governance participation.&#x20;

In M<mark style="color:purple;">a</mark>zu's ve(3,3) token model, token holders can increase their <mark style="color:purple;">g</mark>overnance rights and share $MAZU rewards by staking and locking their tokens for extended periods of time. This effectively reduces the circulating supply and eases the selling pressure of $<mark style="color:purple;">M</mark>AZU on the open market. In addition to receiving $MAZU rewards, stakers also rece<mark style="color:purple;">i</mark>ve $veMAZU for locking their tokens. $veMAZU can be used to participate in governance and vote on yield strategies in the Mazu DAO.&#x20;

Token holders can participate in the ve(3,3) token economy by either staking $MAZU on its own (Single-Asset Staking) or providing locked liquidity in the $<mark style="color:purple;">S</mark>UI-$MAZU liquidity pool (LP Staking).&#x20;

## Single-Asset Staking

Mazu will offer single-<mark style="color:purple;">a</mark>sset staking, allowing users to lock the<mark style="color:purple;">i</mark>r $MAZU for designated periods to earn $MAZU rewards. The amount of rewards depends on how <mark style="color:purple;">l</mark>ong a user stakes their $MAZU; specifically, staking for longer periods results in a higher reward allocation than sh<mark style="color:purple;">o</mark>rter periods. The user can claim $ MAZU rewards anytime, but the locked $MAZU can only be withd<mark style="color:purple;">r</mark>awn after the user's chosen timelock period has expired.\
\
This model encourages $MAZU holders to stake and lock their tokens for longer durations, reducing the token supply on the open market. As the proportion of locked supply increases, less $MAZU will be available on the market, reducing selling pressure on exchanges. This increases the scarcity of $MAZU, potentially leading to price appreciation, which will benefit stakers. 5% of the total supply was allocated to the Single-Asset Staking rewards.

Specifically, rewards are determined through a boost multiplier, which incrementally increases the amount of $MAZU rewards stakers receive weekly. To maximize earnings, stakers can compound their $MAZU manually whenever they like.&#x20;

The following table details the weekly boost multiplier $MAZU rewards for single-asset stakers:

| Staking Duration | Weekly Boost Multiplier |
| ---------------- | ----------------------- |
| 0-7 days         | 0x                      |
| 1-8 weeks        | 0.125x                  |
| 9-12 weeks       | 0.25x                   |
| 13-16 weeks      | 0.5x                    |
| 17-20 weeks      | 1x                      |

## LP Staking&#x20;

The aim of LP staking is to provide deep liquidity for the $MAZU token. This will primarily be facilitated through a $SUI-$MAZU liquidity pool on a decentralized exchange. Users will be able to provide liquidity by depositing LP tokens representing a proportionate amount of $SUI and $MAZU into the pool. Like single-asset staking, users will be able to choose for how long to lock their LP deposit, which will directly impact the quantity of $MAZU rewards they receive. $MAZU rewards can be claimed anytime, but locked LPs can only be withdrawn once the user's chosen timelock period has expired.

Mazu will also allow users to stake their $SUI-$MAZU positions without a timelock. However, these stakers will receive a smaller share of $MAZU rewards and won't be eligible for $veMAZU, meaning they have no governance participation rights. 24% of the total supply was allocated to the LP Staking rewards.

This design mirrors the ve(3,3) token model, where users are heavily incentivized to lock tokens and deepen the liquidity of the $MAZU token, which will further enhance the token's price stability and liquidity.&#x20;

The following table provides details on the allocation of $MAZU rewards for LP stakers:

| Staking Duration | Weekly Boost Multiplier |
| ---------------- | ----------------------- |
| 1-7 days         | 0x                      |
| 1-8 weeks        | 0.125x                  |
| 9-12 weeks       | 0.25x                   |
| 13-16 weeks      | 0.5x                    |
| 17-20 weeks      | 1x                      |

Imagine that over one year, the combined rewards for all Mazu stakers amount to 2000 $MAZU. The reward allocation for each staker depends on several factors, including the *staked amount*, the *staking type*, the *timelock*, and the *reward multiplier*. Additionally, because stakers can withdraw their $MAZU rewards at any point, they can choose to compound their stake to earn additional rewards. Therefore, whether a user decides on whether to compound their stake and how often to do so  (*compounding frequency*) will also have an impact on their allocation of $MAZU rewards.

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