The Crescent Ethos

In the expanding blockchain universe, each network aims to serve a purpose and provide utilities to advance user experience. This is Crescent Network’s manifesto, forged to communicate and provoke discussion around the team’s direction for the chain, ultimately providing guidance around Crescent’s improvements and architectural decision making.

Crescent Network will commit to, and evolve toward embodiment of the following objectives:

• Providing a marketplace for multi-chain assets with capital-efficient liquidity incentivization
• Securing a cross-chain collateralization protocol for users to effectively manage risks of their portfolio

An array of utilities will be built by the team and perfected by the community through governance, each embracing the core fundamentals of the network.

Crescent DEX

The long-term road to a decentralized, active network begins with Crescent DEX, a marketplace that embodies the foundational direction:

• Maximization of capital-efficiency through Hybrid AMM/Orderbook methodologies via fair order matching mechanism
• An incentive structure designed to optimize capital-efficiency and quality of liquidity
• Prioritize security when handling exchanges of bridged assets
• No trading fees until a reasonable, justified cause is presented

The structural design of Crescent DEX prevents:

• Unnecessary low-latency competition
• Front-running and validator extractable value (VEV)
• Attack vectors that exploit LP or market makers

While encouraging:

• Healthy order price competition among traders and orderbook market makers
• Participation by market-makers, regardless of scale
• Attraction of frequent traders, market makers and arbitrageurs
• An optimized trading fee distribution plan in the future for LP, market making, and CRE staking rewards

Our vision is to implement innovative blockchain technology and nurture a cohesive, vibrant community of users. Proposed below is the governance direction for Crescent Network to evolve in the direction that encompasses the core principles.

Bridged Assets

In order to maintain the integrity and security of Crescent Network, Crescent Foundation will lead an investigation of bridges to evaluate security, technology and economic impact. We propose that the network remain highly conservative over incentivizing bridged assets, considering the categories below before implementation through governance:

• Strong evidence of technical and operational security of the bridge
• The bridge protocol must have potential for large ecosystem involvement with Crescent and maintain a significant TVL
• Bridge with more generalized architecture with potential capability for expanded interchain functionalities

Liquidity Incentives

To progress toward sustainable, secure liquidity, the incentivization structure of Crescent will be based on the following fundamentals:

• Allocation of a larger portion of liquidity incentives to market making than LP to pursue a sustainable, capital-efficient liquidity, while constructing a fair and accurate scoring system to evaluate the quality of liquidity provided by market makers on the orderbook
• Implement permission-less market making participation for a diversified and resilient orderbook liquidity providing
• Incentivize different target pairs among LP and MM to fully utilize advantages of each methodology:
• LP: Larger incentives for coin pairs unhedgeable via CEX or large DEX
• MM: Larger incentives for coin pairs hedgeable via CEX or large DEX
• LP incentives focused on: LP in a bCRE pool / large ecosystem coins / interest baring coins

Validator Configuration

Crescent Network’s utilities are highly demanding of large calculations. Securing stable operation of these features requires a high-performing, veteran set of validators to ensure the stability and performance of the blockchain. We propose the following guidelines to do so:

• Maximum of 50 validators participating in consensus at genesis
• The number can be increased by no more than 2 per month if no performance issues exist on the network
• All validators are advised to operate its nodes in the selected region to secure performance and expectable latency conditions for Crescent DEX users
• The region of the validator infrastructure can be changed if significant obstacles arise in the selected region

Liquid Staking

Liquid staking solves the problem of assets remaining dormant by expanding secondary investment opportunities while still giving the user the same power of voting and delegation. This minimizes opportunity cost of traditional staking, which negates an unnecessarily high staking reward rate to pursue more capital-efficient CRE inflation usage for the whole ecosystem:

• Liquid staking results in diversified delegations to liquid staking validators with predefined power weights
• Liquid staking validator group is managed by community governance process

Liquid Staking Validator Group

Crescent Network’s liquid staking utility consists of whitelisted validators that receive delegation directly from the liquid staking module. When a user stakes their CRE, the delegated amount is distributed equally among the set of whitelisted validators that can be changed by governance, led by the Crescent Foundation.

Validator addition conditions:

• Maximum of 1 validator added each month to existing group when no performance issues exist on the network
• The validator’s performance and potential contribution to Crescent Network must be provided and addition must be agreed on by governance

Grounds of expulsion from group:

• Potential significant network performance drag caused by the validator
• Commission rate set differently than the commission rate decided by signal governance
• Statistical evidence of VEV(validator extractable value)

The Crescent Foundation can monitor the statistical differences between mempools in multiple full-nodes and the transactions in each proposed block to prevent VEV. When there exists very strong statistical evidence that a significant number of blocks are proposed by a certain validator, the below punishment on the validator can be executed via governance process:

• Expulsion of the validator from the liquid staking validator group
• Slash proportion of delegations towards the validator
• Tombstone the validator

Liquid Governance

• Liquid Governance ensures governance voting rights to bCRE holders or bCRE-included LP investors in Crescent Network
• Governance voting parameters are maximized to include users with bCRE in their DeFi positions