Nitro Point → $NIT

Nitro Points earned from protocol interactions are converted into $NIT tokens through a structured mechanism involving pair-tagged points, oracle valuations, and the reward contract.

Pair-Tagged Nitro Points and Conversion

Nitro Points are awarded based on pairwise interactions within the protocol, such as providing liquidity or engaging in debt interactions. Each Nitro Point is tagged to the trading pair and denominated in the quote asset of that pair.

For example:

• USDC/NAD pair: Points earned $(NP_{\text{usdc/nad}})$are denominated in USDC.

• SOL/NAD pair: Points earned $(NP_{\text{sol/nad}})$are denominated in SOL.

Conversion to Unified Nitro Points

Tagged Nitro Points are converted into unified Nitro Points $NP_{\text{Unified}}$ for processing in the reward contract.

• Oracle Valuation: The protocol uses an oracle to value the tagged Nitro Points $(NP_{\text{Pair}})$ in terms of the quote asset.

  • $NP_{\text{Unified}} = NP_{\text{Pair}} \times \text{Oracle Price of Quote Asset}$

• Boost Factor: To incentivize specific pairs, the protocol may apply a boost factor that multiplies the value of Nitro Points earned for those pairs:

  • $NP_{\text{Unified}} = NP_{\text{Pair}} \times \text{Oracle Price} \times \text{Boost factor}$

This unified Nitro Point value is then used in the subsequent conversion to NIT tokens, ensuring seamless integration of rewards across multiple trading pairs.

Core Conversion Mechanisms:

Once unified, Nitro Points are governed by two key formulas: the pricing formula (P) and the exchange rate formula (ER).

Pricing Formula

The pricing formula determines the relative value of unified Nitro Points to Nitro Tokens in the reward contract.

$P = \begin{cases} \dfrac{np}{nt} & \text{if } nt > np \\ 1 & \text{otherwise} \end{cases}$

where:

• $np$ = Total unified Nitro Points in circulation.
• $nt$ = Nitro Tokens in the reward contract.
• 1 = ceiling price

Exchange Rate Formula

The exchange rate formula calculates how many Nitro Tokens can be claimed for burning a given number of Nitro Points $(∆np)$

$ER = \min\left(\dfrac{np-∆np }{nt }, 1\right)$

where:

• $Δnp$ = Nitro Points to be burned.
• $np$ = Total unified Nitro Points in circulation.
• $nt$ = Total Nitro Tokens in the reward contract
• 1 = ceiling price

Examples

Given Values:

• Nitro Tokens in the reward contract (nt): 4,000,000

• Nitro Points in circulation (np): 2,000,000

• Nitro Points to be burnt (∆np): 500,000

Pricing Calculation:

• $P = \left(\frac{2,000,000}{4,000,000}\right)$ = 0.5

Exchange Rate Calculation:

• $ER = \min\left(\frac{2,000,000-500,000}{4,000,000},1\right)$ = 0.375

Amount to Claim:

The number of Nitro Tokens $(∆nt)$ claimable for burning $(∆np)$ Nitro Points is given by:

$Δnt=ER×Δnp$

• $∆nt$ = $0.375\times500,000$ = 187,500

The user claims 187,500 Nitro Tokens for burning 500,000 Nitro Points.