# Liquidity Incentives Swivel is the first orderbook-based protocol with liquidity incentives built baseline into token distribution and protocol design. In the context of an AMM, liquidity incentives are straightforward. Any user who provides pooled liquidity across the constant x\*y=k curve is rewarded at a proportional rate for their liquidity provided. However applied to an orderbook liquidity rewards are not pools but binary orders. So how does one incentivize an orderbook? ***By providing token rewards only to those liquidity providers (makers) who's orders are filled.*** Swivel sets aside a significant portion of our Liquidity Incentive pool these orderbook incentives. ![](/files/k697UaVxism9R5M5PHtO) There are other alternative liquidity incentive implementations using orderbook snapshots as described in [Hummingbot's paper](https://hummingbot.io/liquidity-mining-whitepaper/) on liquidity mining, and as most popularly implemented by dYdX. While none seem to properly democratize access to rewards across any market participant, we expect that governance will vote to quickly transition to such a design. ### Current Liquidity Incentive Distributions Each market currently has 2,500 SWIV tokens allocated to it on a daily basis and calculated at 23:55 UTC. Once a day, cumulative volume is calculated, and users are rewarded proportionally based on the amount of YT liquidity they provided to trades. These rewards are earned on a daily basis and then distributed every 4 week liquidity incentive epoch, starting 2-10-2022. ![](/files/nAFtTo0zdbX2tFMHF52M) As shown in the example above, for each market, there are 5,000 SWIV tokens allocated per day. These tokens are then split proportionally based on the limit orders that have been filled in a given day. In the example above, 0xmons traded 200,000 of 1,000,000 total YTs that day. Given they committed 20% of the daily liquidity, 0xmons receives 1,000 SWIV tokens, 20% of the daily allocation. ### Effectiveness of Liquidity Incentives: AMM vs CLOB While liquidity provider token incentives have historically related to providing liquidity on an AMM, it appears that their positive effect on slippage/spread is enhanced within the context of an orderbook. Effectively, within an orderbook users have individualized capital allocation, and with our liquidity rewards, more efficient competitive capital allocation results in more reward generation. This then gives market-makers the incentive to not only optimize their capital efficiency, but in doing so undercut one another as they attempt to take on a competitive position within the orderbook. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.swivel.finance/swivel-exchange/liquidity-incentives.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.