Concentration Incentive & Captains

Concentration Incentive

To ensure the liquidity of each vault remains in the most optimum range, the vault readjustment function can be called by anyone.

This function call will verify two things

1. Liquidity is in the most optimum range minus the delta. ( Delta -> The +- a number that can be safely ignored)

2. The liquidity is not out of range.

If any case returns true then the liquidity needs to be readjusted by calling the vault readjustment function.

Captains

The Pilot protocol provides various opportunities for profit which helps to maintain the vault optimization. Strategies to use these opportunities can be codified as captains - automated bots that can detect when a vault is not optimal or out of range and simply call a function to earn the incentive.

In the start, the Pilot protocol will develop its own captains and will make the code open-source. It is expected that developers and operators will evolve their own captains over time.

Additionally, users can also optimize the vaults directly through the dapp.

The fee that was used by captains for sending the transaction of vault readjustment will be paid in $PILOT Tokens, an additional premium will be given on top of the gas fee as an incentive for optimization of vaults.

Example

If the transaction cost for optimizing the vault was $100, then the protocol will mint $100 of $PILOT tokens and an additional premium of 20%, i.e $120 of $PILOT tokens in total will be sent to the captain.