# 4.6 - Moonmath - LP Rewards

This page is a **model**, not a promise. It’s here to explain *structure* — how Nest’s design can turn LP emissions into compounding alignment that can outgrow impermanent loss over time.

Crypto is volatile. Outcomes depend on adoption, trading volume, emissions, HYPE performance, and market conditions.

***

### The problem: early-chain LPing is hard

On a new chain, the upside is massive — but early markets are volatile and liquidity is thin. That makes LPing challenging because:

* price trends create **impermanent loss (IL)**
* tight ranges can go inactive
* fees alone often don’t scale fast enough to offset IL on typical DEXs

Nest is designed to solve this by giving LPs an “anti-IL toolkit”:\
**emissions → veNEST → fee value → HEV → MEGAHYPE**.

***

### Assumptions (example only)

We’ll model a single scenario:

* Initial position: **$10,000** LP in a **HYPE / USD**-style pair
* Pool type: **Concentrated liquidity (±10% range)**
* Emissions APR: **150%** (example)
* HYPE appreciation: **20% per year** (example)
* NEST price: **$0.004** (held constant for simplicity)
* Annualized DEX rewards: **$2.6M** (example macro assumption)

#### IL progression (example estimate)

Based on a ±10% range and a trending asset:

* Year 1: **18.5%**
* Year 2: **34.8%**
* Year 3: **49.1%**

**Point:** if you only LP and do nothing else, your LP position can shrink over time even if HYPE is up — especially in tight ranges.

This is why **what you do with emissions** matters.

***

{% stepper %}
{% step %}

### Behaviour A — Sell rewards (linear)

You take emissions as cashflow.

**Example year 1**

* LP value after IL: **\~$9,000**
* Emissions earned: **\~$15,000**
* Emissions sold: **\~$15,000**
* **Total:** **\~$24,000**\
  → **\~140% return**

**What this path is**

* strong short-term cashflow
* no compounding
* no growing governance share
* no Engine access

Lowest effort, lowest upside.
{% endstep %}

{% step %}

### Behaviour B — Lock & compound into veNEST (exponential)

Same LP, same emissions — but instead of selling, you lock emissions into **veNEST**.

**What changes**

* veNEST earns the **fee-value side** (100% of trading fee value allocation)
* voting power grows as you keep locking
* your share of future value flows can scale faster

**Illustrative year 1**

* LP after IL: **\~$9,000**
* Emissions locked: **\~$15,000**
* Fee-value earned via veNEST: **\~$6,000**
* **Total:** **\~$30,000**\
  → **\~200% return**

This is where compounding starts to dominate IL.
{% endstep %}

{% step %}

### Behaviour C — HEV route (amplified compounding + MEGAHYPE)

Now deposit veNEST into **HEV** instead of managing votes manually.

**What HEV does (conceptually)**

* auto-votes (hands-off)
* prevents “lazy decay” behavior
* routes a portion of fee value into the HYPE Engine path
* distributes **MEGAHYPE** (treasury-backed amplified HYPE exposure)

**Illustrative year 1**\
If veNEST fee-derived value would normally be **\~$6,000**, assume HEV improves effective compounding:

* Conservative amplification (\~2×): fee-derived value **\~$12,000**\
  → total **\~$36,000+** (**\~260% return**)
* Stronger alignment (\~3×): fee-derived value **\~$18,000**\
  → total **\~$42,000+** (**\~320% return**)

These numbers come from **structure and compounding**, not liquidation leverage.
{% endstep %}
{% endstepper %}

<figure><img src="/files/SjIzv01SQW1mIWzg2NH0" alt="" width="563"><figcaption></figcaption></figure>

### Why this can outgrow IL over time

By year 2–3 (in this framework):

* veNEST controls more vote weight
* fee-value share increases
* rewards stack on rewards
* IL becomes relatively smaller compared to the growing “outside-the-pool” reward streams

This is the core Nest thesis:

* on typical AMMs, you fight IL with fees
* on Nest, you fight IL with **emissions + governance compounding + fee value + Engine effects**

Long-term aligned users are structurally favored.

***

### Who this strategy is for (and who it isn’t)

**Best suited for users who:**

* are bullish on Hyperliquid / HyperEVM long-term
* can tolerate volatility
* can tolerate lockups (with optional secondary market liquidity depending on venue)
* want compounding, not quick flips

**Not ideal if you need:**

* short-term liquidity
* predictable returns
* zero volatility


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