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The Merkl Fragments Program offers a more efficient approach to Gems management, providing significant benefits for both protocols and users.
If you're unfamiliar with the $S airdrop AND the Sonic Gems program, you can find all the details here!
Value proposition
- Maximize Gems Efficiency: Attract more users to your protocols by sharing your Gems with your users
- Boost Gems Earnings: Leverage your forecasted Gems earnings to create a flywheel effect and boost adoption by increasing the APRs with your own governance tokens
- Increase transparency: Build trust and loyalty through a clear, verifiable reward system
- Streamline Operations: Eliminate development complexities and reduce operational overhead
Core mechanics
Protocol participation
- Protocols join by delegating their Gems to a secure Merkl multisig
- Customizable Gems distribution: Protocols decide the percentage split between user rewards and protocol retention
- Choose where and how the Fragments (Gems shares) are allocated
Fragment tokenization
- Merkl deploys unique ERC20 "Fragment" tokens for each participating protocol
- Total supply: 10 million Fragments per protocol
- Choose the emission rate, the only criteria is to have distributed the entire supply before the end of the season
User engagement
- All Fragment earning opportunities are displayed in a Merkl hosted app and on the protocol app
- Opportunity for users to speculate on future Gems earnings: Fragments can be claimed daily and traded freely by users
Season conclusion
- The Merkl multisig receives all the $S earned by the participating protocols
- Seamless fragment-to-$S token redemption process for users managed by Merkl
Multi-Channel Distribution
Dedicated Fragments app
- Sleek, Sonic-branded interface for Fragment farming and management
- Real-time Fragment-to-gems value updates
Fragments secondary market
- Fully tradable ERC20 Fragments tokens
- Dynamic speculation opportunities based on forecasted Gems allocation
Seamless protocol integration
- Effortless incorporation of Merkl data into existing protocol apps
- Enables both Fragment allocation visibility and traditional incentive campaigns
- Native support for co-incentivization with the protocols’ own governance token
- Ability to back run the Fragment allocation for late joiners or integrate existing data
Streamlined Operations
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Protocols define reward targets; Merkl handles distribution logistics
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Simplified workflow ensures smooth user experience and operational efficiency
Key Advantages
By leveraging the Merkl Fragments Program, protocols can maximize the value of their Gems allocation by driving user engagement. This innovative system not only benefits protocols through increased efficiency and reduced overhead but also provides users with exciting new opportunities for participation and potential earnings in the ecosystem.
Got any questions? Want to participate?
Pricing Structure
Merkl's pricing model is designed to align with protocol incentives while ensuring fair compensation for services rendered. The fee paid to merkl will not effect a dapps incentive weight (check this article)
Pricing has been thoroughly discussed and validated with Sonic Labs. It follows a consistent fee structure, capped at a fixed dollar amount. This structure is carefully designed to ensure that using Merkl to manage Gems does not negatively affect the protocol's incentive score.
Here's an improved and more detailed breakdown of the pricing quote:
Fee Structure
Merkl will receive a percentage of the protocol's 10 million Fragments, with the following key points:
- Base Fee Rate: 5% of total Fragments (500,000 Fragments)
- Effective Distribution: 9,500,000 Fragments available for protocol distribution in Season 1
- Fee Cap: A fixed USD value cap, varying by protocol
- Sonic Labs Compliance: Fee structure designed to qualify as
$S distributed to users, meaning that using Merkl will not negatively impact the protocols’ incentive score.
Fee Calculation
The final fee will be calculated as:
While the exact values have not been defined yet, this final fee will be validated by Sonic Labs to validate that it is in the correct range to be eligible a $S distributed to users (no negative impact on the incentive score).
The base cap will range between $20,000 and $40,000 depending on the number of protocols that join the program (20,000$ if more than 10 protocols join).
Factors Influencing Fee Cap
The protocol-specific fee cap is determined by:
- Man-hours Investment
- Integration of protocol data into the reward engine
- Pro-actively reminding the protocol to update their emission targets (the more pro-active the protocol is, the less they pay)
- Campaign management (reward rate adjustments, new asset incentivization)
- Infrastructure Costs
- Proportional to the number of incentivized assets
- Protocol Participation
- Increased participation allows for a lower base cap
End-of-season Reconciliation
If the actual fee is less than 5% (500,000 Fragments), protocols can:
- Reallocate the remainder to users
- Retain the excess for internal use (in this case, protocols will receive less gems during the following season)