Surplus & Rebates

Paragon does not retain execution gains. If a trade executes better than your minimum expected outcome, the improvement is returned to users and distributed across the protocol.

What Is Surplus?

When you swap, you define a minimum acceptable output:

• minOut → your guaranteed result

• amountOut → actual execution result

If execution performs better:

Surplus = amountOut − minOut

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Important

• Surplus is never negative

• If execution cannot meet your minimum → the trade reverts (or falls back)

• Your minimum output is always enforced

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How Surplus Is Distributed

Surplus is split programmatically:

• 60% → Trader

• 30% → Liquidity Providers (LPs) used in the route

• 10% → stXPGN / veFlow lockers

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Why This Matters

In traditional DEX execution:

• pricing improvements are not always returned to the user

• value can be lost to MEV or inefficient routing

With Paragon:

• execution is optimized through solver competition

• improvements beyond your minimum are shared transparently

• incentives are aligned across traders, LPs, and governance

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Example

You swap:

1,000 USDT → BNB minOut = 3.0000 BNB

Actual execution:

amountOut = 3.0120 BNB

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Surplus = 0.0120 BNB

Distribution:

• Trader → 0.0072 BNB

• LPs → 0.0036 BNB

• Lockers → 0.0012 BNB

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👉 In the UI this appears as:

“You saved 0.40%”

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Where Rewards Go

🧑 Trader

• receives immediate rebate

• paid in the output token

• can:

  • remain in wallet

  • be used directly

  • be routed into staking (optional)

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💧 Liquidity Providers (LPs)

• only LPs used in the execution route receive rewards

• rewards are proportional to:

  • liquidity contribution

  • actual usage during execution

👉 Only active, useful liquidity earns surplus.

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🔒 Lockers (stXPGN / veFlow)

• receive a protocol-aligned share

• participate in long-term incentive distribution

• benefit from overall system activity

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How LP Rewards Work

For each trade:

• specific pools are used in routing

• those pools receive a portion of surplus

• LPs earn based on their share of liquidity at execution time

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Claiming Rewards

Trader Rebates

• instant

• no claim required

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LP Flow Earnings

• tracked per pool

• claimable at any time

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Locker Rewards

• accumulate over time

• claimable via staking systems

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Transparency (PoBE)

Each trade records:

• expected output (minOut)

• actual execution output

• surplus generated

• distribution breakdown

Displayed as:

👉 Proof-of-Best-Execution (PoBE)

All data is:

• on-chain

• verifiable

• auditable

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Edge Cases

• no surplus → no additional rewards

• market movement → trade may revert

• very small surplus → minimal distribution

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Security & Protections

• minimum output always enforced

• solver execution validated

• routing checked before settlement

• invalid or unsafe routes rejected

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Parameters (Testnet)

• surplus split: 60 / 30 / 10

• protocol fee: 0% (initial phase)

• route complexity: controlled

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Positioning

Surplus & Rebates transform execution efficiency into shared value.

Rather than extracting value from users, Paragon redistributes execution improvements across participants.

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Summary

Surplus & Rebates introduce a new execution model:

• traders receive execution improvements

• LPs earn based on real usage

• lockers benefit from protocol activity

This aligns incentives across the entire system and connects execution quality directly to user outcomes.