NLS rewards
How the Treasury distributes uNLS incentives to LPPs and how lenders claim them.
Beyond the borrower interest that flows into the pool, lenders are eligible for additional NLS rewards. The Treasury smart contract distributes these incentives to each LPP, tracked internally in uNLS (the smallest unit of NLS).
Reward distribution is based on:
- The total value locked (TVL) in a specific LPP.
- The aggregate TVL across all LPPs.
- TVL threshold brackets, configured via governance in the Treasury contract.
Each time the Treasury transfers uNLS to an LPP, a global reward index is updated to reflect the new incentive distribution across all nLPN holders.
Rewards per nLPN (denominated in uNLS) are tracked as part of the global deposit state managed by the LPP contract. The actual uNLS balances are maintained by the Cosmos SDK bank module. Each lender is represented by an internal record with their wallet address, current nLPN balance, last recorded reward-per-nLPN value, and any pending uNLS rewards accumulated since their last interaction.
Distribute incentives
The global reward per nLPN, denominated in uNLS, increases each time the Treasury transfers new uNLS rewards to the LPP. This value accumulates over time, proportionally raising the value of each nLPN held by lenders.
Update and claim
Whenever a lender deposits or withdraws, the contract calculates the rewards accrued up to that point based on the difference between the global reward per nLPN and the lender's last recorded reward per nLPN. The result is added to the lender's pending rewards balance. This update is triggered automatically on deposit, withdrawal, or claim.
On claim, the pending uNLS is transferred to the lender's address by default (or to a specified recipient). The lender's reward index is then synced with the current global reward per nLPN. If the lender withdraws their full LPN balance, any remaining rewards are claimed automatically and they cease to hold any nLPN.
Treasury
The Treasury is a single-instance contract responsible for calculating uNLS rewards across all LPPs based on their individual TVLs and the network-wide aggregate. Each LPP reports its TVL directly to the Treasury, which uses governance-defined threshold intervals to determine the applicable APR. Thresholds start at a minimum and step up as higher tiers are reached. Reward distribution runs periodically, with duration measured in hours.