welcome to the
liquidity tournament

Delegate UM

Delegate UM and vote on which assets should receive incentives from the protocol to receive rewards.

Provide Liquidity

LPs earn rewards based on how much their positions are used. Providing liquidity in response to Delegator votes garners a higher chance of being rewarded.

Receive Rewards

Delegators receive rewards directly to their wallet balances. LPs' rewards are distributed to their LP reserves.

What is the LQT and why does it matter?

The Liquidity Tournament (LQT) is a mechanism designed to direct incentives toward the most impactful trading pairs on the Penumbra DEX. It allows the community to determine which assets should receive additional rewards, aligning liquidity provision with real user demand.
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By concentrating rewards in highly-voted pools, the LQT encourages liquidity providers (LPs) to participate in meaningful markets, improving pricing and expanding the anonymity set.

How is the LQT different for delegators and LPs?

Delegators and LPs play distinct but complementary roles in the LQT. Delegators vote on which asset pairs should receive incentives. LPs provide liquidity to those pairs and receive rewards if their pricing is competitive.
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This structure ensures that those staking assets help direct incentives, while those supplying liquidity compete to provide the best pricing.

What is the anonymity set and why is it important?

The anonymity set, commonly known as a “shielded pool” refers to the assets deposited into the Penumbra network. A larger anonymity set offers stronger privacy guarantees because it makes it harder to single out a users’ activity in and out of the anonymity set.
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The LQT increases the anonymity set by attracting liquidity to the DEX. A more efficient DEX allows for cheaper swaps, and more users. Moreover, the assets brought over by traders to participate in liquidity provisioning increase the anonymity set as well.

What are incentivised assets, and how is the threshold determined?

Only assets that receive votes from at least 5% of total voting power are eligible for rewards. This threshold prevents a single voter from unilaterally directing incentives to obscure or illiquid markets, protecting the system from manipulation.
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It is important to note that all incentivised trading pairs follow the structure UM/ASSET. For instance, if USDC receives sufficient votes, the resulting incentivised pair will be UM/USDC. This ensures consistency and interoperability across the DEX.

How does a delegator vote in the LQT?

To participate in voting, a user must first obtain and then stake UM. Once staked, the process is as follows: visit the DEX, connect your Prax wallet, select token pairs, and vote.
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The search box may also be used to vote for any asset, even if not listed by default. A delegator must have staked UM at the beginning of the epoch in order to vote.

What does opting into the Delegator Leaderboard mean?

Delegators have the option to use the same address across epochs to appear on the Delegator Leaderboard. This enables visibility into voting streaks and cumulative performance over time. This has no other effect, everything else remains private.

Alternatively, rotating addresses can be used for increased privacy. All votes carry equal weight, regardless of leaderboard participation.

How are voting rewards distributed?

Delegator rewards are automatically minted and distributed to the same address used for voting at the end of each epoch. There is no need to manually claim these rewards.

LP rewards are deposited directly into the liquidity positions that were opened. The distribution is pro-rated based on the volume each position processed. A position with higher volume receives a greater share of the rewards, while lower-volume positions receive less.

Is LP participation in the LQT different from regular LP-ing?

No. LPs use the same tools and processes as in standard liquidity provision. However, the LQT introduces additional rewards and visibility.
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When liquidity is provided to an incentivised pool and competitively priced, the LP becomes eligible for additional rewards and may appear on the leaderboard if they choose so.

What is the LP LQT flow?

The LP flow under the LQT operates as follows: delegators vote to determine which assets should be incentivised, rewards from the LP Incentive Pool are allocated to the winning assets, LPs who provided liquidity to these assets earn rewards based on two factors—volume processed by their position and competitiveness of their pricing.
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This structure encourages LPs to not only provide liquidity, but to do so efficiently and fairly.

Will there be a social card or sharing feature released?

Yes. Delegators who earn rewards will receive a shareable stats card on the DEX. This includes voting streaks, rewards earned, and a personalised link for sharing.

How long is an epoch?

Each epoch spans 34,560 blocks, which is approximately 48 hours. However, this can vary. Epochs can be monitored here.

More information can be found here.

How do incentives work in the LQT?

The LQT distributes rewards through two primary incentive pools.

LP Incentive Pool—allocated based on gauge voting outcomes and the volume of executed trades.
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Delegator Incentive Pool—this pool is distributed based on each delegator’s vote share, but only if the voted asset receives at least 5% of total voting power. Delegators who vote for assets that do not meet the 5% threshold will not receive rewards.

This mechanism discourages voting for obscure assets that might be controlled by a single party, helping to maintain fairness in reward distribution. This ensures that both participation and outcome are valued across roles.

How long does the tournament last?

The Liquidity Tournament is ongoing and will continue until the 1 million UM prize pool is fully distributed. Each epoch represents one round of the tournament.

How is privacy preserved in the LQT?

Penumbra’s architecture ensures privacy across multiple dimensions.
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LP positions are publicly visible, but their ownership remains private. Votes are publicly recorded but fully anonymised. The Delegator Leaderboard is opt-in and unlinkable to any other wallet activity. Users’ transaction history remains private at all times

How does the LQT improve the anonymity set?

The LQT strengthens the anonymity set through a cascade of participation and incentives—more delegation leads to higher LP rewards, higher rewards attract more liquidity, more liquidity drives increased volume, and increased volume expands the anonymity set, enhancing privacy for all users.

What are streaks?

Streaks track how many consecutive epochs a delegator has participated in. While they currently do not impact rewards, they may be used in future iterations of the Liquidity Tournament to unlock additional benefits.

Join the Tournament

welcome to theliquidity tournament

welcome to the
liquidity tournament