Liquidity Incentive Migration

Teddy Woodward
Teddy Woodward

We wanted to give an update to Notional LPs regarding the issue of decreasing NOTE incentives due to an approximation in Notional’s incentive calculation methodology. We will change the calculation to be exact going forward, and we will compensate LPs for any NOTE incentives they have lost out on due to this approximation.

LPs will be compensated for any losses occurring between the inception of the protocol and the time that the incentive calculation is upgraded. Full compensation for any lost NOTE will require no action from LPs other than to claim NOTE from a future airdrop contract. This means that LPs will be made whole for any past NOTE losses as well as any potential future NOTE losses as a result of this issue.

The Issue

Last week, some liquidity providers on Notional noticed that the amount of NOTE incentives they could claim began to decrease. The way that Notional calculates incentives involves an approximation that can cause this issue when the TVL in the protocol increases substantially. Because liquidity in Notional quadrupled in just a few days, this approximation led to a decreasing amount of claimable NOTE incentives for early LPs.


  • We will upgrade the incentive calculation to an exact per-block accrual algorithm similar to the method used by Sushi Masterchef V2. We will implement this upgrade as soon as we can get it developed and properly audited. We expect to implement this change in early Q1 2022.
  • All accounts can continue to claim incentives under the current algorithm until the contracts have been upgraded with the more precise calculation. Once the contracts have been upgraded, all future incentives will be calculated using the new exact per-block accrual algorithm.
  • Post upgrade, we will be able to determine exactly how many NOTE tokens each LP accrued prior to the contract upgrade and exactly how many NOTE tokens they should have been able to claim under the more precise calculation. We will then take this difference and airdrop it in NOTE to each LP.
  • LPs will not need to take any action in this process. There is no time limit to claim the airdropped NOTE or the NOTE accrued as incentives for providing liquidity.

A big thank you to our community for proposing solutions and for their understanding as we work through this remediation process. If you haven’t already, join us in Discord if you have questions, and check out our Discourse, where the community can discuss governance proposals.

Teddy Woodward

Co-Founder and CEO