# How to Earn Nitro Point

Nitro Point is a measure of protocol utilization, serving as a reward mechanism that governs revenue sharing and token emissions, allocated to **utilizoors**—including Liquidity Providers, Borrowers, and Blacklistoors.

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## Key Metrics for NP Allocation

{% hint style="success" %}
The total Nitro Points emitted cannot exceed the revenue generated by the protocol during the same period.

$$∑NP≤Totalrevenue​$$
{% endhint %}

* **Utilization Value (UV)**:

  Represents the value of liquidity utilized in swaps and borrowing, as well as the value of debt blacklisted.

  * $$UV=∑(liquidity\_{event​})$$<br>
* **Utilization Fee (UF)**:

  the fee generated during utilization in either swaps or debt interactions.

  * &#x20;$$UF=UV×fee\_{percentage​}$$<br>
* **Utilization Fee (UF)**:

  the fee generated during utilization in either swaps or debt interactions.

  * &#x20;$$UF=UV×fee\_{percentage​}$$<br>
* **Treasury Fee Share (TFS)**:

  The revenue generated by the protocol, which is a percentage share of the utilization fees allocated to the protocol’s treasury.

  * $$TFS=UF×0.25$$ (Assuming Treasury Fee = 25%)

## Point Allocation Breakdown&#x20;

### **Liquidity providers:**&#x20;

LPs earn points$$(NP\_{LP})$$ based on the utilization of their liquidity in both swaps and debt interactions.

* $$NP\_{LP}=TFS\_{swap}+TFS\_{debt}$$

**Mechanism**:

To earn NP, LPs must deposit their LP tokens into the **LP Nitro Point Allocator**.

* On deposit, the current value of the LP token is recorded.
* On claiming NP or withdrawal, the system calculates the change in value of the deposited LP tokens, reflecting the fees earned.

**Nitro Points Calculation**:

* The protocol retains 25% of the fees as **TFS**. This portion is used to mint NP for LPs.
* $$\text{Total Fees Earned} = \text{Value at Claim or Withdrawal} - \text{Value at Deposit}$$
* $$NP\_{LP} = \dfrac{\text{Total Fees Earned} - \text{TFS}}{1- \text {TFS}}$$

{% hint style="success" %}
LPs can withdraw their tokens anytime, even immediately after deposit, as the system does not lock LP tokens.&#x20;
{% endhint %}

### **Borrowers:**&#x20;

Borrowers earn Nitro Points $$(NP\_{borrower})$$ based on the $$TFS\_{debt}$$, with the rewards boosted by the effective distance $$(D%)$$ of the borrow bin from the active bin. Borrowers closer to the active bin earn fewer points, while those farther away are incentivized with higher rewards.

The effective distance ($$D%$$) in terms of bin step(s):

* $$D%=(\text{Borrow range - Buffer range})$$
* $$NP\_{borrower} = TFS\_{debt} + \min\left(D%, 100%  \right)$$

**Where:**

* **Borrow Range**: The percentage difference between the active bin and the borrow bin.
* **Buffer Range**: The percentage range on either side of the active bin where borrowing is restricted.
* **Effective Distance (D%)**: Borrow Range minus Buffer Range

{% hint style="success" %}
This boost mechanism (+D%) aligns borrower rewards with the protocol’s capital efficiency goals, encouraging the utilization of inactive liquidity bins.
{% endhint %}

### **Blacklistoors:**

Blacklistoors earn Nitro Points for blacklisting expired Debt NFTs, a process that triggers the automated recovery of debt and safeguards the protocol.

blacklistoors points $$(NP\_{blacklistor})$$ focus on the efficiency and timeliness of blacklisting expired debts.

* $$NP\_{blacklistoor​}= \min \left( \dfrac{n}{T},1 \right)\times TFS\_{debt}$$

**Where:**

* $$T=\text{Time at blacklist - Time at debt expiry}$$. Time elapsed since debt expiry.
* $$n$$: Time threshold (in seconds) for full reward allocation.

{% hint style="success" %}

* If blacklisting occurs within **n**, the reward is $$TFS\_{debt}$$
* Delays beyond **n** proportionally reduce the reward
  {% endhint %}


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