# 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

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The total Nitro Points emitted cannot exceed the revenue generated by the protocol during the same period.

$$∑NP≤Totalrevenue​$$
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*   **Utilization Value (UV)**:

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

    * $$UV=∑(liquidity_{event​})$$\

*   **Utilization Fee (UF)**:

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

    * &#x20;$$UF=UV×fee_{percentage​}$$\

*   **Utilization Fee (UF)**:

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

    * &#x20;$$UF=UV×fee_{percentage​}$$\

*   **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.
* $$\text{Total Fees Earned} = \text{Value at Claim or Withdrawal} - \text{Value at Deposit}$$
* $$NP_{LP} = \dfrac{\text{Total Fees Earned} - \text{TFS}}{1- \text {TFS}}$$

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LPs can withdraw their tokens anytime, even immediately after deposit, as the system does not lock LP tokens.&#x20;
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### **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.

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- If blacklisting occurs within **n**, the reward is $$TFS_{debt}$$
- Delays beyond **n** proportionally reduce the reward
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