# Vault Rewards

Users earn rewards for providing liquidity to the Lyra Protocol's market maker vaults.
The program aims to balance the interests of liquidity providers and create a fair distribution of rewards, taking into account both the liquidity provided and the amount of LYRA staked by each user.
The program distributes rewards to liquidity providers based on their effective liquidity in a pool, which takes into account both the liquidity provided and the amount of LYRA staked by the user. Users can boost their rewards by staking LYRA, with the maximum boost capped at 2 times the original liquidity provided.
Vault rewards are allocated to users as a share of their effective liquidity based on the proportion of stkLYRA they have compared to the total stkLYRA held by all users in the pool. To obtain the maximum 2x boost, a user's share of stkLYRA in the pool needs to be at least equal to their share of liquidity in the pool.

## Formula

Let:
• $M$
: The amount of LP tokens a user received for providing liquidity to an options pool
• $M_{tot​}$
: The total number of LP tokens issued from the pool
• $L$
: The amount of stkLYRA staked by the user
• $L_{tot​}$
: The total amount of stkLYRA staked amongst pool LPs
• $x$
: A parameter for weighting
The effective liquidity for a user
$M_e​$
is calculated using the following formula:
$M_e = min(xM + (1-x) * (L / L_{tot}) * M_{tot}, M)$
If a user stakes LYRA for only part of an epoch, the formula takes into account the fraction of the epoch they are active for. For example, if a user only stakes LYRA for half of the epoch, the amount of LYRA staked (
$L$
) in the formula will be replaced with 0.5L, and similarly for the liquidity
$M$
.

## Implementation Details

• Vault rewards are calculated off-chain and distributed via reward distribution contracts.
• Reward quantities and parameters are set by Snapshot votes.
• Rewards are distributed in fortnightly epochs.