This past month we deployed concentrated liquidity (V3) across multiple chains, enabling users to provide liquidity and earn rewards exactly how they wish, with granular control over their positions. Though far more capital-efficient, concentrated liquidity greatly complicates position management due to the constant need for fine-tuning the position to ensure it remains profitable. Thus, we decided to utilize Merkl to both expand our V3 reward solutions and lighten the load on our users.
What Is Merkl?
Merkl is a mechanism created by Angle Labs to incentivize liquidity providers (LPs) in concentrated liquidity positions (ie, V3). It allows users to “incentivize” LPs and flexibly distribute token rewards however the incentivizor sees fit. Incentivizors can decide exactly how they want to distribute their incentives; for example, they might choose to favor LPs who have set a tighter range than others, or incentivize out of range liquidity. LPs retain full custody of their liquidity while earning rewards and can also customize their positions to further optimize earnings. Outside of gas, Merkl is completely free to use for LPs.
Merkl is designed to ensure fair reward distribution; it works off an off-chain script that analyzes on-chain data from incentivized pools and calculates the rewards for LPs based on the incentivizor's preferences. This data is then aggregated in a Merkle tree, which is updated regularly to reflect new rewards. Merkl uses epochs for reward distribution, with the duration varying depending on the chain. LPs can claim all their rewards from different pools in one transaction at the end of each epoch, with no need to claim rewards at every epoch. To verify system integrity, Merkl features a dispute period for every new Merkle root update, during which any discrepancies can be reported and verified.
You can setup your own pool rewards on the Merkl app here
What's New?
The integration of Merkl into Sushi provides a host of improvements for our users:
Non-Staking Rewards LPs can immediately begin receiving rewards after they provide liquidity - no staking necessary!
Weighted Rewards Fully customizable distribution formulas allow for the aforementioned script to compute a reward score for each position, which then has the incentivizor’s custom weight applied to it. Incentivizors can even further customize reward distribution by allowing addresses with a specific token (such as veCRV) to earn boosted rewards, if they choose to do so.
Single-Click Harvest Merkle trees allow for LPs to make a single click to harvest all of their rewards on a chain, across every position. If they just want to harvest a specific token’s rewards but not from the rest of their positions, LPs can also choose to do so with a single click.
Pre-Determined Rewards & Time Period Rewards run for a set period of time, with a pre-determined amount of tokens to be distributed over that time period.
My Rewards
With all of these new changes comes a fresh new home on the UI for rewards as well - let’s take a look below:
To check on all of the positions that you currently have, select the My Rewards tab above the search bar on the Pools page. This will aggregate and list all of the claimable rewards you have available to claim, delineated by chain. In addition, every single position you have on Sushi will be listed here as well, regardless of the chain it’s on.
If you hover your mouse over one of your positions, a helpful popover menu similar to the one above will render, giving you a concise breakdown of your rewards for that particular position.
Rewards for an entire chain’s worth of positions can now be collected in one single click! Collect all of the available rewards at once or collect a single asset at a time - the choice is entirely up to you.
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