Kyo Credit Season 2 & ACS: Optimizing Liquidity Incentives

5 min read4 days ago

Kyo Finance is rolling out big updates to its rewards system. Kyo Credit Season 2 is here, shifting the focus to active liquidity provision, while the Astar Contribution Score (ACS) expands ecosystem-wide incentives.

So, what does this mean for you? Precisely and fairly rewarding those who contribute more.

Here’s everything you need to know about Kyo Credit Season 2 and ACS.

1️⃣ Understanding Kyo Credit & ACS

What is Kyo Credit?

Kyo Credit is our own liquidity rewards system, designed specifically for Kyo Finance users. It tracks and rewards users based on how much they contribute to the protocol.

Season 1 was total value based, meaning rewards were distributed simply based on how much liquidity was deposited, regardless of the range setting.
Season 2 is active TVL-based. Now, it has been designed to give rewards proportional to actual contribution by awarding higher credits for placing LP positions narrower.

What is ACS? [ 1 ACS = 0.1 $ASTR reward]

ACS (Astar Contribution Score) is a separate incentive program managed by the Astar Foundation to reward TVL growth across the entire Soneium ecosystem. 1 ACS will be redeemable for 0.1 $ASTR token when the campaign ends.

If you provide liquidity on Kyo Finance, you’ll earn ACS based on ecosystem-wide TVL criteria. This is indexed by the foundation itself, not by us.
Kyo Finance has also received ‘discretionary ACS’ to distribute directly to our users — more on that below.

Since ACS rewards broad TVL growth, Kyo Credit will now focus on rewarding users who contribute to deeper, more efficient liquidity inside Kyo Finance.

2️⃣ What Happens to Season 1 Kyo Credit?

With these updates, Season 1 will officially close, and Season 2 will start from scratch.

Season 1 Kyo Credit scores will be finalized and locked in.
Season 2 has already started accumulating from 0 UTC, Feb 20th to coincide with the start of the ACS campaign. Surprise! During the period from 0 UTC to 1pm UTC, credits were accumulated simultaneously with Season 1 Kyo credits!

This ensures that past contributions are counted while shifting incentives toward more active liquidity provision. Details on exact reward distribution will be shared later!

3️⃣ Rewards to active liquidity

What’s New in Season 2?

✅ Kyo Credit is now based on:

Counts active liquidity — The KYO credit is given to active ticks, contrary to how the foundation indexes liquidity by counting the total TVL regardless of range. This means that LPs with narrower ranges receive more credit than those with wider ranges.
Credit distribution among pools — Credit distribution among pools will be proportional to the trading fees generated by each pool, automatically, similar to ve-tokenomics. Multipliers may be applied to certain pools to boost initial key trading pairs. You’ll see KYO logo in the APR column of the eligible pools for the credit!

💡 Example:
User A deposits $100 across 10 price ticks (spreading liquidity widely) :
100/10=$10 on the active tick
User B deposits $10 into 1 active trading tick (concentrating liquidity) :
10/1=$10 on the active tick
Since both users contribute equally to the activated liquidity, they earn Kyo Credit at the same rate — even though User A deposited more funds in total.

This means rewards go to LPs who provide liquidity where it’s actually used, not just those who deposit large idle liquidity.

Why This Matters

Better trading execution — Encourages liquidity where it’s needed.
More rewards for active LPs — Rewards go to those taking market risk.
More efficient DEX liquidity — Aligns incentives with long-term trading efficiency.

4️⃣ How Kyo Finance Will Distribute ACS Rewards

Kyo Finance has received ACS allocation, and 100% of it will be given to users based on two factors:

🔹 90% of ACS Rewards: Distributed Based on Kyo Credit

[Daily ACS earned by User] = [90% of Daily discretionary ACS for Kyo] × (user’s daily earned KYO Credit / total daily distributed KYO Credit)
This means if you’re earning Kyo Credit, you’ll automatically earn ACS too!

🔹 10% of ACS Rewards: Distributed Based on Trading Volume

To reward active traders, 10% of ACS allocation will be distributed based on trading volume.
ACS will be distributed proportionate to volume and fee tier of trading pairs.
To prevent arbitrage bots from monopolizing rewards, a MAX CAP has been set so that each wallet can only receive up to 5% of this. Any ACS exceeding the cap will be redistributed to other users.

💡 Summary :

LPs who earn Kyo Credit get 90% of Kyo Finance’s ACS allocation.
Traders who generate volume get the remaining 10%.
This structure may be fine-tuned over seasons.

ACS points can be tracked on the official ACS campaign dashboard, and Kyo Finance will also add UI updates to help users see ACS earnings from LPing and trading. (TBA)