Responsive Organized Weighing (ROW)

Responsive Organized Weighing (ROW) is the mechanism Full Sail uses to dynamically calibrate liquidity incentives at the pool level. Its purpose is to align emissions with the actual liquidity needs of the protocol, ensuring that rewards are neither wastefully high nor insufficient to support expected trading activity.

ROW is computed with the following steps:

Definitions:

• $ROE_{N-2} : \text{Return on emissions two epochs ago.}$
• $ROE_{N-1} : \text{Return on emissions previous epoch.}$
• $V_{N-1} : \text{Volume in the previous epoch.}$
• $V_{pred} : \text{Predicted volume for the current epoch.}$
• $L_{N-2} : \text{Average liquidity over epoch.}$
• $L_{N-1} : \text{Average liquidity over epoch.}$
• $g : \text{Governor multiplier (e.g.\ } g = 0.8\text{).}$
• $w_{ROE} : \text{Weight applied to ROE (default 0.5).}$
• $w_{V} = 1 - w_{ROE} : \text{Complementary weight applied to Volume.}$
• $N : \text{Current epoch number.}$

1. Compute Relative Changes

   $\begin{aligned} \Delta ROE &= \frac{ROE_{N-1}}{ROE_{N-2}} - 1 \\[1em] \Delta V &= \frac{V_{pred}}{V_{N-1}} - 1 \\[1em] \Delta L &= \frac{L_{N-1}}{L_{N-2}} - 1 \\[1em] Governor &= g \cdot \Delta L \end{aligned}$

2. Apply Governor Rules to Volume Change

   The governor constrains how much volume change can be considered in the reward calculation. Since liquidity is averaged per epoch, these rules respond to average liquidity trends, not just short-term fluctuations.

   $\Delta V_{adj} = \begin{cases} \max \left( \min(\Delta V, 0.1), -0.1 \right), & \text{if } |Governor| < 0.1 \\[0.5em] \max \left( \min(\Delta V, Governor), -0.1 \right), & \text{if } Governor > 0.1 \\[0.5em] \min \left( \max(\Delta V, Governor), 0.1 \right), & \text{if } Governor < -0.1 \end{cases}$

   Interpretation:

   • If average liquidity (governor) is stable, volume can move at most ±10%.
   • If average liquidity increases significantly, upside in volume is allowed up to Governor, but downside capped at−10%.
   • If average liquidity decreases significantly, downside in volume is allowed up to Governor, but upside capped at +10%.
3. Logarithmic Averaging

   Logarithmic changes are computed to combine ROE and adjusted volume in a smooth way:

   $\ell_{ROE} = \ln(1 + \Delta ROE) \\[1em] \ell_{V} = \ln(1 + \Delta V_{adj})$

   Weighted average in log space:

   $\ell_{avg} = w_{ROE} \cdot \ell_{ROE} + w_{V} \cdot \ell_{V}$

   Convert back from log scale:

   $RewardChange = e^{\ell_{avg}} - 1$

Liquidity Targets

Each incentivized pair begins with a targeted liquidity level based on market comparables and optimal volume-to-liquidity ratios. These targets typically fall within a defined range and act as the baseline for ROW adjustments.

Voting and Adjustments

Every epoch, veSAIL holders submit predictions for the upcoming week’s trading volume on each pool. These predictions are aggregated to determine whether emissions for that pool should increase or decrease relative to the previous epoch.

ROW combines forward-looking predictions with backward-looking evaluations. This dual structure allows the system to not only adjust incentives based on expected future activity, but also verify whether past changes were justified by actual performance.

Balancing Liquidity and Volume

The core objective of ROW is to converge toward an equilibrium where liquidity is appropriately scaled to trading demand. Excess liquidity is inefficient when volume is low, while insufficient liquidity constrains growth. By incrementally adjusting incentives through predictive voting, ROW directs rewards to pools that are most likely to sustain healthy trading activity and fee generation.

Over time, this creates a feedback loop that balances the cost of emissions with the value they generate, ensuring liquidity incentives remain both responsive and efficient.

Bootstrapping Phase: The “Set Sail” Period

Before the ROW mechanism can function as intended, Full Sail will undergo a short bootstrapping phase called the Set Sail period. This takes place during the first four epochs following launch and is designed to seed liquidity, distribute tokens to early adopters, and establish a reliable baseline for emissions.

During the Set Sail period, emissions of oSAIL are set manually by the team rather than being determined by the ROW formula. This ensures that the protocol attracts initial liquidity and distributes tokens effectively without distorting the long-term Return on Emissions (RoE) calculations.

Key characteristics of the Set Sail period:

• Epochs 1–2: Higher APRs are offered to attract liquidity and reward early adopters.
• Epoch 3: Emissions are reset to align more closely with actual trading fees, ensuring RoE reflects sustainable activity rather than artificially elevated rewards.
• Epoch 4: Emissions remain manually controlled to provide the second required data point for ROW. After this epoch, the ROW formula begins operating normally.

veSAIL holders should continue voting throughout the Set Sail period. Voting accuracy still determines their share of trading fees, even though emissions are not yet tied to predictions in the ROW formula.

By the end of this bootstrapping phase, the protocol will have seeded strong liquidity, distributed tokens to its earliest participants, and established the data foundation required for ROW to manage emissions dynamically and sustainably.