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DAMM v2 has liquidity mining built into the pool program. Projects can fund reward campaigns directly on a pool, and LP positions earn those rewards automatically while they provide liquidity. There is no separate farm contract, no LP token wrapping, and no extra staking step for LPs. If a position has eligible liquidity, it can accrue rewards.

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How It Works

Each DAMM v2 pool has up to two reward slots. Once a reward slot is initialized, it cannot return to the uninitialized state. A reward slot defines:
  • The reward token mint.
  • The reward vault that holds funded tokens.
  • The funder that can add reward tokens.
  • The reward duration.
  • The reward rate over time.
As time passes, rewards accrue across the pool and are assigned to positions based on each position’s share of total liquidity. Position Share=Position LiquidityTotal Pool Liquidity\text{Position Share} = \frac{\text{Position Liquidity}}{\text{Total Pool Liquidity}} If a position owns 10% of the pool liquidity during a reward period, it earns roughly 10% of the emitted rewards for that period.

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What Counts as Liquidity

DAMM v2 uses total position liquidity for reward accounting. That can include:
  • Unlocked liquidity.
  • Vesting liquidity.
  • Permanently locked liquidity.
This is important for launches and treasuries. A team can lock liquidity for commitment and still let that liquidity participate in the same reward campaign as other LP liquidity.

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Reward Campaign Lifecycle

1

Initialize a reward slot

The pool creator or an authorized operator sets up reward slot 0 or 1 with a reward mint, funder, and duration.
2

Fund the reward vault

The funder sends reward tokens into the vault. DAMM v2 calculates the reward rate over the active duration.
3

LP positions accrue rewards

Positions earn rewards over time based on their share of total liquidity.
4

Position owners claim rewards

Rewards remain pending on the position until the position owner claims them.

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Reward Limits

Only the configured funder can fund a reward slot. Reward duration can be updated separately, but it must remain within the 1 day to 1 year limit.

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Why It Matters

Liquidity mining helps projects bootstrap deeper markets. Instead of asking LPs to provide liquidity only for trading fees, a project can add reward tokens that make participation more attractive during key market phases.

Launch Incentives

Reward early LPs during the first days or weeks of a new pool.

Sticky Liquidity

Encourage LPs to keep capital in the pool through important growth periods.

No Separate Farm

Rewards accrue directly to DAMM v2 positions, reducing operational complexity.

Position-Aware Rewards

Rewards are tied to NFT positions, making incentives easier to track and compose.

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Empty Liquidity Periods

If a reward campaign is active but the pool has no liquidity, DAMM v2 tracks the number of empty-liquidity seconds. On the next funding, the funder can carry that ineligible reward value forward into the new reward window. If they do not carry it forward, the ineligible reward must be withdrawn before funding again.

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Product Takeaway

DAMM v2 liquidity mining is designed for simple, native LP incentives. Projects can fund reward campaigns, LPs can earn without staking elsewhere, and positions keep trading fees, locks, and rewards under one NFT-backed ownership model.