Sommelier aims to help users maximize profits while reducing risks. There are four ways in which users can earn money through Sommelier. Let's explore them.
For more specific information about fees and rewards built to bootstrap the marketplace, see the initial guide to Sommelier tokenomics for more information.
Users can invest with Sommelier and earn profits by depositing funds into a Cellar. For instance, if users inserted funds into the Cellar in order to become Cellar Liquidity Providers, they'll earn profits from the Cellar performance APY.
Exact details on how to deposit money into a cellar will be updated once we have the first cellar live in coming weeks. Stay tuned.
Every Cellar needs to start somehow. The Cellar encodes a specific strategy which will earn profits. A person, or group of people, collectively called the Cellar-Creator, can conceptualize a strategy along with evidence which supports the strategies successfulness. This information can be presented to the Sommelier governance, and if accepted, there will be a reward in the form of a KPI for onboarding a successful Cellar.
Additionally, the Cellar-Creator can choose a performance fee or management fee for their Cellar. As such, the Cellar-Creator is paid from the fees of the Cellar for the duration of the Cellars lifetime.
Strategy Providers are an important part of Sommelier. Users can earn money when they act as Strategy Providers for Sommelier.
Once a Cellar is live, a strategy provider will need to send Cellar strategy recommendations to the Sommelier Validators. The recommendations will encode the actions which the Cellar should take in order to improve profits. There can be multiple strategy providers. The specific strategy provider whose action is taken will be rewarded with a fee for providing their service.
Within the Sommelier protocol, fees generated by cellars that are not otherwise directed to a cellar creator, strategy provider, or the community pool are paid to stakers. Validators earn a percentage of this staking payment depending on the commission they have set for their delegators.
To understand how validating works or how to become a validator for Sommelier, read this guide.
People who build a frontend for the Sommelier protocol will earn fees when users utilize their frontend application.