$MERCURY

Pools

The $MERCURY system consists of pools of liquidity. Pools in $MERCURY collect deposited base assets from liquidity providers and deploy them on platforms to earn interest. For example, the first $MERCURY pool is the $MERCURY pool, which launched with a $MERCURY/Compound adapter.

Adapters

Adapters connect pooled capital to platforms. The first adapter is a $MERCURY/Compound adapter. The $MERCURY/Compound adapter, as its name suggests, connects the $MERCURY pool to the Compound platform giving $MERCURY pool LPs the opportunity to pool together and earn interest on Compound.

Strategy

The strategy connects all pools and adapters together and selects the best adapter to deploy capital to every hour for each pool. It also generates and distributes $MERCURY tokens to LPs at the end of every epoch.

Epochs

Epochs are two week periods where liquidity is locked up and deployed to platforms by the system. At the end of an epoch it is wound down and the interest earned is calculated and can be distributed to LPs according to their proportional TIERS ownership. During the wind down $MERCURY tokens are generated and can be redeemed using the same proportional calculation used to redeem interest. In the first version of the $MERCURY, capital is only deployed on yield farming platforms, but in later versions $MERCURY will be able to create dynamic risk selection for LPs by adapting to different types of DeFi protocols.

$MERCURY

The $MERCURY token is capped at 1,000 and is generated every 2 weeks during the wind down of an epoch. Tokens are earned by LPs proportional to how many dollars per second (dsec) they provided to the system for the duration of an epoch. $MERCURY token subsidy is halved every epoch until epoch 8. From that point on, the system steadily releases 200 $MERCURY tokens per epoch, until reaching the 1,000 cap. There are no fees on $MERCURY in version 1. Later versions will introduce $MERCURY platform fees, and at that time, staking $MERCURY tokens will earn $MERCURY holders a proportion of fees incurred by users. When $MERCURY token generation ends fees will continue to provide incentives to liquidity providers. $MERCURY tokens must be staked for LPs to join the enhanced return A TIERS.

TIERs

Pools are divided up into TIERS each with their own unique properties. There are three user-facing TIERS for LPs to add liquidity into and two backend TIERS that exist only at the smart contract level to provide LPs with aditional optionality when adding liquidity. The risky, high interest earning TIERS (TIERS A) earns interest according to its principal contribution multiplied by the TIERS interest multiplier. The TIERS interest multiplier defaults to 10. As a result, A TIERS LPs earn 10x more interest than they would without $MERCURY, likewise AA TIERS LPs earn 1/10th of the interest they normally would.

• AA TIER: LPs adding liquidity to the AA TIERS earn less interest but are covered in the case of loss from platform risk. That covered capital comes from the principal and interest earnings of A TIERS LPs. AA TIERS LPs are are awarded with 80% of the $MERCURY token generation.
• A TIER: LPs adding liquidity to the A TIERS earn more interest but lose their principal and interest earnings in case of loss from platform risk. A TIERS LPs earn 10% of the $MERCURY tokens generated per epoch. $MERCURY earnings are not included in covering first loss for AA TIERS LPs.
• S TIER: The S TIERS earns 10% of $MERCURY generated per epoch. The system uses the S TIERS to balance the A and AA TIERSs such that they are always in a perfect equilibrium with each other such that the TIERS interest multiplier is maintained at its exact value. For example, with a TIERS interest multiplier of 10, the AA:A ratio in a pool is always 10:1.