# Covenant Incentives (Talents)
Covenant rewards participation in the protocol through an incentives program based on **Talents**.
**Talents** are points that track your contribution to Covenant. They are earned by:
* Providing capital to Covenant markets
* Referring other users to the protocol
Talents are tracked off-chain and displayed on a **leaderboard**, allowing users to compare their participation across the ecosystem.
The incentives program runs in **seasons**, with a fixed maximum number of Talents distributed each season.
***
## Season 2
Season 2 runs for 11 **weeks: March 16th to May 30th**.
During this period, Covenant will distribute up to **11,000,000 Talents (maximum)**
Distribution rules:
* A maximum of **4,000 Talents per $100 deposited** in Covenant
* Talents are distributed **proportionally** to the time-weighted TVL deposited or referred
Talents are split between:
* **95% → Users**
* **5% → Referrers**
***
## User Talents
Users earn Talents are distributed proportionally to the **long-term exposure** to Covenant markets. Rather than rewarding short-term deposits, the system favors **consistent participation over time**.
User rewards are calculated using the following metric:
$$
User Score =D\_1^{1/2}.D\_{20}^{1/2}.T.R
$$
Where
* $$D\_1$$ is the user's daily deposit TVL across participating markets
* $$D\_{20}$$ is the user's average 20-day deposit TVL across participating markets
* $$T$$ is a +10% additional factor if the user follows Covenant on Twitter
* $$R$$ is a +10% additional factor if someone referred the user
Talents are distributed daily in proportion to each user's score.
### Why this metric?
This design encourages healthy liquidity and discourages opportunistic farming.
It does so by:
* **Rewarding consistent TVL** maintained over longer periods
* **Penalizing volatility**, such as rapidly depositing and withdrawing capital
In practice, this means users who maintain stable exposure over time earn more Talents than users who briefly deposit large amounts.
***
## Referrer Talents
Referrers earn Talents based on factors including the **TVL contributed by the users they referred**.
This uses the same long-term exposure logic as the user calculation, but based on the aggregate deposit of all individuals they referred.
$$
Referrer Score =R\_1^{1/2}.R\_{20}^{1/4}.T
$$
Where
* $$R\_1$$ is the referred daily deposits TVL across participating markets
* $$R\_{20}$$ is the referred average 20-day deposit TVL across participating markets
* $$T$$ is a +10% additional factor if the referrer follows Covenant on Twitter
Note that for referrals, the ¼ power is used for the 20 day average, leading to a sublinear increase of the referrer score vs TVL.
***
## Worked Example
Consider the following simplified example.
#### User Activity
Alice deposits **$10,000** into Covenant and keeps it there consistently.
After 20 days:
* $$D\_1 = 10,000$$
* $$D\_{20} = 10,000$$
Her score becomes:
$$\begin{align\*} User Score &= 10,000^{1/2} \* 10,000^{1/2} \ &= 100 \* 100\ &= 10,000 \end{align\*}$$
Now consider Bob.
Bob deposits **$10,000 most days,** but last week took it out of Covenant markets for a few days
His averages become:
* $$D\_1 = 10,000$$
* $$D\_{20} = 8,100$$
His score becomes: 9,000
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