Incentives & Emissions
Kaskad's incentive system is designed to reward sustained, genuine protocol usage — not snapshot farming, mercenary capital, or short-term deposit-and-withdraw strategies.
All incentive distributions are epoch-based, activity-gated, and utilization-weighted.
Epoch Mechanics
Incentives operate on a monthly epoch cycle (1 epoch ≈ 1 month).
- Activity is tracked continuously throughout the epoch
- Rewards are claimable only at epoch closure — not during the epoch
- Users must maintain sustained participation for the full epoch to qualify
- Depositing right before epoch close and withdrawing after does not generate meaningful rewards
This design ensures that only users who contribute genuine, lasting liquidity are rewarded.
Supplier Incentives
Suppliers earn incentives based on three factors:
- Amount supplied — larger deposits earn proportionally more
- Duration — longer supply periods within the epoch receive higher weight
- Uptime — the percentage of the epoch during which the position was active
Brief supply periods or early withdrawals reduce eligibility. A user who supplies $10,000 for 28 out of 30 days earns significantly more than one who supplies $50,000 for 3 days.
Supplier Eligibility Thresholds
| Requirement | Default | Adjustable Range | Hard Floor |
|---|---|---|---|
| Minimum deposit | $100 | ±15% | $100 |
| Uptime | 90% | ±2.5% | 80% |
Borrower Incentives
Borrower incentives use the same epoch model but add a critical dimension: utilization weighting.
Rewards are allocated based on:
- Borrowed amount — proportional to loan size
- Duration — sustained borrowing throughout the epoch
- Asset utilization — borrowing from high-utilization pools generates more rewards than borrowing from idle pools
The utilization weighting ensures that incentives flow toward productive borrowing — markets where there is genuine demand for liquidity — rather than artificial leverage or position farming.
Borrower Eligibility Thresholds
| Requirement | Default | Adjustable Range | Hard Floor |
|---|---|---|---|
| Minimum LTV | 15% | ±5% | 15% |
| Uptime | 50% | ±5–10% | 50% |
Emission Split
Each epoch, the total emission is split between suppliers and borrowers. The default split is 50/50, adjustable by governance within the 40–60% range.
Example configurations:
| Split | Scenario |
|---|---|
| 50/50 | Balanced market — default setting |
| 40/60 (favor borrowers) | Low utilization — incentivize demand |
| 60/40 (favor suppliers) | High utilization — incentivize new supply |
Governance can adjust the split based on market conditions, but it cannot set it outside the 40–60% range.
Governance Alignment Bonus
Active governance participants may receive enhanced incentive eligibility. This optional bonus layer requires:
- Staking $KSKD in the governance contract
- Voting on proposals during the epoch
- Maintaining an active liquidity position
This ties the highest reward tiers to users who are engaged in both protocol usage and governance — aligning incentive power with protocol stewardship.
Undistributed Emissions
If emissions go unclaimed or utilization is low during an epoch, the undistributed tokens are not forced into circulation. Instead:
- Excess emissions return to the DAO Treasury
- Governance may redistribute them in future epochs
- They can be allocated to milestone incentives
- They can be routed to the supply adjustment mechanism
This prevents inflation during low-activity periods and preserves the token's emission budget for periods when it creates real value.
Milestone Incentives
In addition to regular epoch-based rewards, Kaskad includes event-triggered milestone incentives. These are distributed when the protocol reaches predefined growth thresholds:
TVL Milestones: $1M → $3M → $5M → $10M → $20M → $50M → $100M
Validation safeguards:
- Milestones are validated using TWAL/TWAP (Time-Weighted Average Liquidity / Time-Weighted Average Price) to prevent wash-trading and artificial TVL inflation
- Cooldown periods between milestone claims
- Challenge windows allow the community to contest suspicious milestone triggers
Milestone incentives are funded from the user onboarding budget and route through the Growth Pool into the DAO Treasury and Milestone Incentives allocation.