Rules explained08 / 10
Treasury and POL
In 30 seconds
- Whitepaper plan: 5% of every LP exit stays with the protocol as POL
- POL belongs to the protocol and is not returned when Power ends
- The reserve is not a price floor; it need not buy without limit in a drop
Two ideas to keep apart
- The Reserve is the protocol's asset layer, not just a vault. It holds liquid reserves such as DAI, POL built by the Plan Contract Pool, POL retained from Gauge LP exits, reserves built from fees, and any other assets governance approves. Whitepaper p. 126
- POL (protocol-owned liquidity) is one of the Reserve's most important long-term assets: LP positions the protocol owns itself, which do not disappear when users leave. Whitepaper p. 132
POL ⊂ Reserve Assets
The protocol receives long-term assets; participants receive economic rights with a lifecycle. The two must stay separate, and neither Power nor LFEO is a fixed AiLGNS debt. Whitepaper p. 127
Protocol Asset ≠ User Emission Right
Where POL comes from
The whitepaper names two main paths: Whitepaper p. 117
| Source | Protocol receives | Participant receives | Fixed emission promised? |
|---|---|---|---|
| Plan Contract Pool | 100% of the LP, counted as POL | Power with a lifecycle | No |
| Gauge LP exit | 5% of the LP, counted as POL | If eligible, LFEO emission rights with a lifecycle | No |
Source: Whitepaper p. 118
Plan Contract Pool: participants contribute capital, and the protocol deploys it in planned batches as liquidity in the official pools. The resulting LP belongs 100% to the protocol. Participants receive Power, not ownership of or a claim on that LP. When the Power's lifecycle ends it stops earning emission, and the POL already built is not returned. Whitepaper p. 117
Power Completion ≠ POL Return
Gauge LP exit: every Gauge LP exit returns 95% to the user and keeps 5% as POL. Whitepaper p. 117
The four POL parameters, one by one
These four numbers from the whitepaper define how the 5% retention and LFEO work.
5%: the LP exit retention
It applies to every Gauge LP exit and is the same for everyone, whether or not you qualify for LFEO. If you don't qualify, the 5% still goes to POL; you just get no LFEO. Whitepaper p. 117 Whitepaper p. 47
LP Withdrawal = 95% · LP Retention = 5% → POL
The 5% is meant to balance the protocol's liquidity build-up against capital's freedom to move, not to impose a steep exit cost. Whitepaper p. 118
25 DAI: the first LFEO threshold
LFEO is a future emission right with a lifecycle, created from that 5% POL contribution. Whitepaper p. 118 First threshold: the 5% of LP the protocol actually keeps from a single exit must be worth at least 25 DAI. Whitepaper p. 119
5% LP Value(DAI) ≥ 25 DAI
- In the simple case, an LP exit of about 500 DAI leaves 25 DAI in the 5% retention. Whitepaper p. 119
- 25 DAI only decides LFEO eligibility. It is not a minimum to provide LP and not a minimum to exit. Whitepaper p. 119
- Each exit is judged on its own; separate exits do not add up. Below 25 DAI, the 5% still goes to POL and LFEO is zero. Whitepaper p. 119
500 DAI: the second LFEO threshold
When the LFEO is created you must also hold eligible veAiLGNS voting power worth at least 500 DAI. Only two kinds count: ordinary veAiLGNS locked for the full 208 epochs (about 4 years), and permanent veAiLGNS. Whitepaper p. 119
Eligible veAiLGNS Value(DAI) = Effective veAiLGNS × AiLGNS Price(DAI) ≥ 500 DAI
Both thresholds must be met, and they are checked once, as a snapshot at LP exit settlement. Once an LFEO exists, later ve decay or a falling AiLGNS price does not cancel it. Whitepaper p. 120
LFEO Eligible = (5% LP Value ≥ 25) ∧ (Eligible veAiLGNS Value ≥ 500)
30%: the LFEO emission cap
All active LFEO together can receive at most 30% of the relevant emission pool's daily executable budget. Governance can lower the figure but never raise it above 30%. Whitepaper p. 121 The cap is part of the protocol constitution. Whitepaper p. 163
LFEOShare ≤ 30%
It keeps historical LFEO from crowding out incentives for ordinary LPs. Whitepaper p. 121
LFEO is not a debt
- LFEO is not AiLGNS and not a fixed return. The protocol does not promise to pay back the value of the 5% LP in equal value, a fixed amount or a fixed multiple. Whitepaper p. 119
- Each LFEO's emission capacity is capped at the DAI value of its 5% POL contribution when it was created. It ends when that value cap is reached or its emission period ends, whichever comes first, and then becomes Protocol LFEO, which earns no new emission. Whitepaper p. 121
Active LFEO → Protocol LFEO → Stop New Emission
POL belongs to the protocol
- Irreversible: whether it came from the Plan Contract Pool or the 5% retention, POL belongs to the protocol once it is in. The end of a Power or LFEO lifecycle never returns POL to the original participant. Whitepaper p. 122
- Can be rebalanced: in a major risk event, a liquidity failure or an ecosystem change, the protocol can migrate, rebalance or move POL between pools through governance and risk procedures. Ownership stays the same. Whitepaper p. 122
POL Contribution = Irreversible
How the Reserve is layered
Owning assets does not mean all of them can be used at once. Whitepaper p. 128
Total Protocol Assets = Liquid Reserve + Deployed Assets
- Liquid Reserve: DAI and other liquid assets not yet deployed, available for planned allocation.
- Deployed Assets: assets already placed in POL or other protocol infrastructure.
So the market value of POL is not cash the protocol can spend at will. Whitepaper p. 128
Separate ledgers
Money with different purposes must be kept on separate books: Whitepaper p. 132 Whitepaper p. 133
| Ledger | Purpose / source |
|---|---|
| Core Reserve | Long-term protocol assets and planned liquidity |
| Insurance Reserve | Buffer against system risk |
| Ecosystem Reserve | 1% of the AiLGNS sell fee |
| Community Development Fund | 1% of the AiLGNS sell fee |
The Insurance Reserve is funded by its initial allocation of 10,500,000 AiLGNS (5% of supply) Whitepaper p. 67, 50% of unused Community budget, and DAO budget cut by the HealthScore gate. Whitepaper p. 75
Planned liquidity: deploying in batches
The Reserve does not turn everything into LP at once; it deploys on a plan, in batches. Whitepaper p. 129 Deployment can slow down, pause or be reallocated when liquidity clearly exceeds real demand, volume stays weak, HealthScores deteriorate, the LSP stays congested, prices swing abnormally, or a major asset or contract risk appears. Whitepaper p. 129
Normal → Slowdown → Pause → Reallocate
The Reserve is not a price floor
The Reserve can build liquidity, adjust POL and absorb risk, but it does not mean the protocol must keep buying whenever AiLGNS falls. Whitepaper p. 132
Reserve ≠ Guaranteed Price Floor
It should be verifiable on chain
The whitepaper asks for the Reserve to become verifiable on chain over time: liquid reserve, deployed assets, POL, the Insurance Reserve, the Ecosystem Reserve and the Community Fund, along with metrics such as POL ratio, liquidity deployment ratio and capital efficiency. Whitepaper p. 133 None of these accounts have data until the HELIX contracts launch; until then, the on-chain data this site can read is in the data center.