Carbon DeFi is an orderbook like DEX where people create limit, range, recurring, constant product, and concentrated liquidity positions. We are looking to incentivize liquidity providers under both the WETH/USDT and wBTC/USDT trading pairs. Rewards will only be distributed to liquidity providers that provide liquidity that is close to the current market price. As both wBTC/USDT and WETH/USDT are volatile trading pairs, we want to incentivize liquidity that is always inrange and for that reason we will only look to incentivize liquidity that is +-2% above and below the current market price. While an LP can still provide constant product liquidity and be rewarded for that liquidity, only the portion of that liquidity that is +-2% above and below the current price will be rewarded proportionally. LPs that provide concentrated liquidity around the market price will therefore earn the vast majority of rewards proportional to how much TVL they are providing.
Note: We are not looking to incentivize spot traders (AKA takers) only liquidity providers (AKA makers)
As Carbon DeFi is an orderbook DEX, we can also incentivize one token in the pair more than the other. That is, we can decide if one token in the pair should have a higher weight and this allows for incentivizing bidding liquidity more than asking liquidity. For our specific use case, we will incentivize both tokens in the pair equally which means that in order to maximize the amount of rewards that you will receive for a campaign, you have to provide equal liquidity in both tokens +-2% above the current market price.
The reward mechanism operates in discrete time intervals called epochs that last 240 to 360 seconds. The rewards calculation for a given epoch is based on a static snapshot that is taken at random within each discrete time interval. When the snapshot happens a new target price is also determined so that we can adapt to price changes due to market conditions. This design discourages "mercenary liquidity" activity or nefarious actors that might want to time the exact time when the snapshot occurs to provide liquidity right before and remove it after that as they are not aware when the snapshot happens. Additionally, this method rewards all markets participants equally as long as their liquidity is inrange even if their provided liquidity did not generate any volume. As we are not rewarding volume, then wash trading is not something that comes into the picture since trading against your own liquidity positions (as a taker) will not grant you extra rewards. In addition, it is not free to trade as a taker against liquidity positions in the protocol as there is a fee/markup that needs to be paid by takers when using liquidity that exist on Carbon DeFi. Lastly, note that only makers (AKA liquidity providers) that are providing liquidity into the protocol are getting rewarded while takers are not.
More details on the reward design can be found in the following document:
https://drive.google.com/file/d/1GFFcAxrDD0kdQF8QYfkwYEmeeqEDFnNl/view
When it comes to rewards distribution, Merkl has a minimum requirement that $1 of rewards need to be provided every hour per trading pair and with 30 days on average per month this translates to about ~$750. We are planning on running a total of 2 campaigns per month on Merkl which target each respective trading pair (WETH/USDT and wbTC/USDT). We are looking to reward LPs within these trading pairs with ~$1500 in rewards per month for a total of ~$3000 per month. We believe that these campaigns should last for a total of 4 months in order to see meaningful results and long term LPs within the Celo blockchain ecosystem. Given the above and a 30 day average price of ~0.15 USD/OP (calculations done on March 6th 2026), we are seeking a grant of 80,000 OP rewards or $12,000 (assuming a price of 0.15 USD/OP).
| Trading Pair | Month 1 OP Rewards | Month 2 OP Rewards | Month 3 OP Rewards | Month 4 OP Rewards |
|--------|--------|--------|--------|--------|
| ETH/USDT | 10,000 OP | 10,000 OP | 10,000 OP | 10,000 OP |
| wBTC/USDT | 10,000 OP | 10,000 OP | 10,000 OP | 10,000 OP |
Note: In the case of a change in Merkl’s minimum requirement amount, we will adjust the duration of the campaign.
Our goal is to grow the TVL on these trading pairs between $200K-400K and have that TVL be within productive price ranges so that it can generate meaningful volume as it is used by market participants. On the volume side, we are expecting TVL turn over to be 1.5x-2x based on the 30 day average TVL amount on these trading pairs. Based on previous volume levels we think that this is achievable (on the low side) and can probably expect >2x with inrange liquidity that is +-2% from the current market price. To reach those TVL levels we expect to distribute close to $1500 in rewards per month to each trading pair which would generate an APR of 9% at the TVL level of $200K and 4.5% at the TVL level of 400K. We believe that this is a worthy and attainable goal within the Celo blockchain.
Note: While some TVL already exist for these trading pairs, most of that TVL is not within active ranges and a focus of this campaign is to reward liquidity within active ranges.