Puffer Season 2 Update: Tokenizing On-chain Incentives
Puffer Season 2 Update: Tokenizing On-chain Incentives
Puffer is introducing a new points distribution method as part of our Season 2 airdrop campaign, which leverages community governance and tokenized Puffer Points to establish a more decentralized and sustainable incentive model.
TL;DR
Puffer’s Season 2 Update introduces tokenized incentives with the new CARROT token, replacing off-chain points with on-chain rewards. Earn CARROT through activities like staking PUFFER, governance voting, and liquidity provisioning.
- Bi-weekly gauge voting determines incentive distribution.
- CARROT tokens convert to PUFFER post-Season 2.
- Governance evolves with enhanced transparency and community control.
Introduction: The Vision for Updated Season 2
Puffer’s Season 2 represents a pivotal moment in the protocol’s journey. Following the successful conclusion of the “Crunchy Carrot Campaign” which included a token generation event (TGE) snapshot on October 5th, this new phase brings community-driven rewards to the forefront.
Season 2 officially launched on October 5th, 2024, and will run until May 5th, 2025 with Puffer Points to be calculated in two phases. Initially, off-chain Puffer Points are distributed similarly to Season 1. These points will later be proportionately converted into on-chain CARROT tokens based on the prevailing emission rate. In the Season 2 update, CARROT token incentives are being introduced and can be earned as rewards through activities such as staking vePUFFER, participating in governance voting, and providing liquidity but more on this later.
To understand the significance of these updates, let’s first look back at the journey that brought us here with a recap of Season 1.
From Season 1 to Now: A Brief Recap
The Crunchy Carrot Campaign
Season 1, launched in early 2024, was a significant and successful step forward for Puffer. Dubbed the “Crunchy Carrot Campaign,” it achieved remarkable milestones:
- 126k unique depositors at peak participation
- A record daily deposit of 85,959 ETH on February 2nd, 2024
- An all-time high TVL of 538,792 ETH (valued at $1.84 billion)
This phase introduced pufETH as a leading Liquid Restaking Token and advanced Ethereum decentralization by reducing Lido’s TVL and market dominance by 2%. 75,000,000 PUFFER tokens were allocated to early participants, solidifying our early community.
Building on this strong foundation, Season 2 began in October 2024, bringing new methods and tools to advance Puffer’s decentralization efforts.
The Start Of Season 2
Season 2 officially launched on October 5, 2024, with Puffer Points to be calculated in two phases. Initially, off-chain Puffer Points are distributed similarly to Season 1. These points will later be proportionately converted into on-chain CARROT tokens based on the prevailing emission rate.
To prepare for these updates, our governance mechanism has also evolved, introducing a more dynamic and participatory model. Puffer Governance Gauges will determine how incentives are directed to various protocols, DeFi integrations, or pools where on-chain CARROT tokens can be earned. These tokens will be convertible to PUFFER tokens after Season 2.
PufferDAO
Governance plays a vital role in Puffer’s journey toward decentralization, especially as we approach the pivotal Season 2 update. With the launch of PufferDAO after the TGE, and the introduction of vePUFFER as voting power, we’ve laid the foundation for a robust governance framework.
This innovative governance mechanism, developed in collaboration with Aragon, empowers long-term, value-aligned participants in the Puffer ecosystem. By staking PUFFER tokens, users mint vePUFFER NFTs, which linearly accrue voting power over time, incentivizing sustained engagement while offering the flexibility to unstake at any time.
The groundwork laid by PufferDAO supports the updated season 2 governance structure, which introduces a tokenized points system to enhance community-driven decision making.
You can read more details from our previous article.
Updated Season 2: New Era in Decentralized Governance
Updated Season 2 introduces an ERC-20 tokenized points system that improves transparency and community control. Here is how we’re building our governance-driven ecosystem:
Key Features:
- Transparent Voting System:vePUFFER holders influence bi-weekly distributions.
- Permissionless Proposal Submission: Anyone can propose changes.
- Proportional Distributions:Rewards reflect voting outcomes.
- Public Accessibility:Voting and distribution data are available to all.
Governance will initially rely on snapshot voting before transitioning to full on-chain voting at a later date, which will help to streamline the user experience. These updates mark a significant step forward in Puffer’s governance, complemented by the introduction of gauges, which determine how incentives are distributed.
Gauge Categories
Gauges, which are locked for the duration of each epoch, enable consistent distribution cycles and are categorized as follows:
- Liquidity Provisioning
- Concentrated Liquidity Provisioning
- Protocol Integration
Through bi-weekly voting, vePUFFER holders decide on gauge allocations, ensuring that rewards align with community priorities.
Updated Season 2: The CARROT token
The CARROT token is central to these updates. As an ERC20 token, CARROT serves as a claim ticket for future PUFFER tokens. This transition reflects Puffer’s commitment to full on-chain governance and enhanced transparency while eliminating points dilution.
Two Separate Claim Processes
- Pre-CARROT Period:Users earning Puffer Points before CARROT tokenized incentives go live will have their points proportionately converted into PUFFER tokens at the end of Season 2.
- CARROT Incentives: Tokens earned through activities such as staking vePUFFER, participating in governance voting, and providing liquidity.
It’s worth noting incentives gauges will be voted on bi-weekly and reward incentives are distributed daily, with the allocation determined by community voting. Gauges receive a percentage of votes and earn a proportional share of that week’s CARROT rewards (e.g. if a gauge receives 30% of votes, the relevant pool will receive 30% of that week’s CARROT rewards).
Full CARROT tokenomics will be detailed in the next Season 2 blog post.
Looking Forward
Updated Season 2 embodies our commitment to building a truly decentralized ecosystem. By empowering participants to control rewards, enhancing incentive distribution, and paving the way for a more dynamic and transparent protocol.
The first epoch voting round will commence on January 23th, since staking PUFFER has a 3-day warm-up period, make sure to stake your PUFFER ahead of time if you wish to take part.
👉 Stake $PUFFER now and make your voice heard: vote.puffer.fi
About Puffer Finance
Puffer Finance is a leading innovator in Ethereum infrastructure, focusing on next-generation rollups supported by liquid restaking (LRT) and preconfirmation as an AVS. With products like Puffer UniFi and Puffer UniFi AVS on EigenLayer, we are dedicated to enhancing Ethereum’s decentralization. puffer.fi