> For the complete documentation index, see [llms.txt](https://velocity-network.gitbook.io/velocity-network/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://velocity-network.gitbook.io/velocity-network/usdvlct-tokenomics/liquidity-policy.md).

# Liquidity Policy

Liquidity is expanded **algorithmically in proportion to real demand**.

Let:

* L<sub>t</sub>​ = current liquidity depth
* V<sub>t</sub>= 30-day DEX trading volume
* β,γ = tuning parameters

#### Target liquidity level

L<sub>t</sub><sup>\*</sup>=β×`√`t​​

#### Minted liquidity incentives

Mint<sub>t</sub><sup>LP</sup>=min⁡(γ×max⁡(0, L<sub>t</sub><sup>∗</sup>−L<sub>t</sub>), LP\_cap\_remaining)

This framework ensures:

* liquidity increases only when justified by volume
* incentives remain within the 20% allocation cap
* mercenary liquidity mining cannot drain the system