# Aqua Ecosystem Rewards and Fee Structure

The Aqua ecosystem is designed to distribute reasonable rewards to both on-chain ecosystem participants and the protocol throughout the entire process, from liquidity provision to smart routing swaps. As the Total Value Locked (TVL) within the smart contract grows, ecosystem rewards also expand structurally.

<figure><img src="/files/Eat0olyE0jbowlo0pQeN" alt=""><figcaption></figcaption></figure>

### 1. Liquidity Provision Rewards

Liquidity provided by users interacts with the smart contracts of global DeFi on-chain vaults (e.g., BENQI) that have completed external security audits to generate protocol rewards. 15% of the total rewards generated in this process are automatically attributed to the Aqua ecosystem reward fund and transparently utilized as follows:

| **Category**                                      | **Ratio** | **Purpose and On-chain Execution**                                                                                                                                                                 |
| ------------------------------------------------- | --------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Liquidity Pool Depth Enhancement & Ecosystem Fund | 15%       | 15% of the total generated rewards are directly utilized to structurally strengthen the protocol ecosystem, such as enhancing b-Token pair liquidity and adding depth to on-chain liquidity pools. |

The remaining 85% of the rewards are distributed to the users who provided liquidity by an algorithm, and users can receive them through the smart contract in the form of base assets (USDt, USDC, AUSD) at any time they wish.

> ℹ️ Structural Significance: It simultaneously realizes protocol value stabilization, on-chain liquidity securing, and user trust enhancement.

### 2. Base Asset ↔ b-Token Conversion (Minting/Withdrawal) Fees

Users mint proof tokens (bUSDT, bUSDC, bAUSD) during the liquidity provision process, and the following protocol fee policies apply when withdrawing them back to base assets:

| **Category**                             | **Fee Rate** | **Policy Description**                                                         |
| ---------------------------------------- | ------------ | ------------------------------------------------------------------------------ |
| Base Asset → b-Token (Provision/Minting) | 0%           | Free conversion (Minimizes entry barriers for ecosystem liquidity provision)   |
| b-Token → Base Asset (Withdrawal)        | 0.2%         | Protocol fee incurred (Secures resources for protocol maintenance and rewards) |

> 💡 Balanced On-chain Design: Eliminates entry costs during liquidity provision to encourage participation, and supports sustainable operation of the protocol through a minimal fee upon asset withdrawal.

### 3. Smart Routing Swap Fees

When executing conversions (swaps) between b-Tokens (bUSDT, bUSDC, bAUSD) or other supported tokens within the ecosystem, a fixed 0.1% protocol fee is incurred, which is utilized as an ecosystem contribution reward for liquidity pools.

### 4. Reward Simulation Hypothesis Model (Based on TVL)

| **Total Value Locked (TVL)** | **Swap Fee Fund** | **Withdrawal Fee** | **Protocol Reward Distribution** | **Total On-chain Reward Scale** |
| ---------------------------- | ----------------- | ------------------ | -------------------------------- | ------------------------------- |
| $100M                        | $5M               | $1M                | $1M                              | $7M                             |
| $300M                        | $12M              | $3M                | $3M                              | $18M                            |
| $500M                        | $15M              | $5M                | $5M                              | $25M                            |

> 🚨 Caution: The table above is a hypothetical mathematical simulation illustrating that the rewards for the entire protocol ecosystem structurally expand as the on-chain liquidity (TVL) scale increases. It does not legally guarantee fixed returns under any circumstances.

### 5. Summary of On-chain Ecosystem Interaction Flow

<figure><img src="/files/eUs4uMWa5FI2d2fNxQDa" alt=""><figcaption></figcaption></figure>

* Step 1: Users provide base asset (USDt, USDC, AUSD) liquidity and mint proof tokens (bUSDT, bUSDC, bAUSD).
* Step 2: The provided liquidity safely interacts with verified external DeFi vaults (e.g., BENQI) in the form of single or pair pools.
* Step 3: A portion (15%) of the generated protocol rewards is attributed to the on-chain reward fund.
* Step 4: This fund is utilized to structurally strengthen the ecosystem, such as enhancing b-Token pair liquidity.
* Step 5: Users can receive accumulated rewards through b-Tokens and withdraw them back to base assets at any time they wish.

> 💡 This information may be updated depending on market conditions.


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