diff --git a/crates/core/app/src/params/change.rs b/crates/core/app/src/params/change.rs
index 6a88269091..d58b5c4b05 100644
--- a/crates/core/app/src/params/change.rs
+++ b/crates/core/app/src/params/change.rs
@@ -68,6 +68,7 @@ impl AppParameters {
             distributions_params:
                 DistributionsParameters {
                     staking_issuance_per_block: _,
+                    liquidity_tournament_incentive_per_block: _,
                 },
             fee_params:
                 FeeParameters {
@@ -163,6 +164,7 @@ impl AppParameters {
             distributions_params:
                 DistributionsParameters {
                     staking_issuance_per_block: _,
+                    liquidity_tournament_incentive_per_block: _,
                 },
             fee_params:
                 FeeParameters {
diff --git a/crates/core/component/distributions/src/params.rs b/crates/core/component/distributions/src/params.rs
index 87c05730a7..62360e6a59 100644
--- a/crates/core/component/distributions/src/params.rs
+++ b/crates/core/component/distributions/src/params.rs
@@ -9,6 +9,7 @@ use serde::{Deserialize, Serialize};
 )]
 pub struct DistributionsParameters {
     pub staking_issuance_per_block: u64,
+    pub liquidity_tournament_incentive_per_block: u64,
 }
 
 impl DomainType for DistributionsParameters {
@@ -21,6 +22,7 @@ impl TryFrom<pb::DistributionsParameters> for DistributionsParameters {
     fn try_from(msg: pb::DistributionsParameters) -> anyhow::Result<Self> {
         Ok(DistributionsParameters {
             staking_issuance_per_block: msg.staking_issuance_per_block,
+            liquidity_tournament_incentive_per_block: msg.liquidity_tournament_incentive_per_block,
         })
     }
 }
@@ -29,6 +31,8 @@ impl From<DistributionsParameters> for pb::DistributionsParameters {
     fn from(params: DistributionsParameters) -> Self {
         pb::DistributionsParameters {
             staking_issuance_per_block: params.staking_issuance_per_block,
+            liquidity_tournament_incentive_per_block: params
+                .liquidity_tournament_incentive_per_block,
         }
     }
 }
@@ -37,6 +41,7 @@ impl Default for DistributionsParameters {
     fn default() -> Self {
         Self {
             staking_issuance_per_block: 1_000_000,
+            liquidity_tournament_incentive_per_block: 0,
         }
     }
 }
diff --git a/crates/proto/src/gen/penumbra.core.component.distributions.v1.rs b/crates/proto/src/gen/penumbra.core.component.distributions.v1.rs
index 8ad924095d..5c819c4835 100644
--- a/crates/proto/src/gen/penumbra.core.component.distributions.v1.rs
+++ b/crates/proto/src/gen/penumbra.core.component.distributions.v1.rs
@@ -5,6 +5,9 @@ pub struct DistributionsParameters {
     /// The amount of staking token issued per block.
     #[prost(uint64, tag = "1")]
     pub staking_issuance_per_block: u64,
+    /// The amount of staking token flowing from the community pool to the liquidity tournament each block.
+    #[prost(uint64, tag = "2")]
+    pub liquidity_tournament_incentive_per_block: u64,
 }
 impl ::prost::Name for DistributionsParameters {
     const NAME: &'static str = "DistributionsParameters";
diff --git a/crates/proto/src/gen/penumbra.core.component.distributions.v1.serde.rs b/crates/proto/src/gen/penumbra.core.component.distributions.v1.serde.rs
index efe1238b66..228b37042a 100644
--- a/crates/proto/src/gen/penumbra.core.component.distributions.v1.serde.rs
+++ b/crates/proto/src/gen/penumbra.core.component.distributions.v1.serde.rs
@@ -9,12 +9,20 @@ impl serde::Serialize for DistributionsParameters {
         if self.staking_issuance_per_block != 0 {
             len += 1;
         }
+        if self.liquidity_tournament_incentive_per_block != 0 {
+            len += 1;
+        }
         let mut struct_ser = serializer.serialize_struct("penumbra.core.component.distributions.v1.DistributionsParameters", len)?;
         if self.staking_issuance_per_block != 0 {
             #[allow(clippy::needless_borrow)]
             #[allow(clippy::needless_borrows_for_generic_args)]
             struct_ser.serialize_field("stakingIssuancePerBlock", ToString::to_string(&self.staking_issuance_per_block).as_str())?;
         }
+        if self.liquidity_tournament_incentive_per_block != 0 {
+            #[allow(clippy::needless_borrow)]
+            #[allow(clippy::needless_borrows_for_generic_args)]
+            struct_ser.serialize_field("liquidityTournamentIncentivePerBlock", ToString::to_string(&self.liquidity_tournament_incentive_per_block).as_str())?;
+        }
         struct_ser.end()
     }
 }
@@ -27,11 +35,14 @@ impl<'de> serde::Deserialize<'de> for DistributionsParameters {
         const FIELDS: &[&str] = &[
             "staking_issuance_per_block",
             "stakingIssuancePerBlock",
+            "liquidity_tournament_incentive_per_block",
+            "liquidityTournamentIncentivePerBlock",
         ];
 
         #[allow(clippy::enum_variant_names)]
         enum GeneratedField {
             StakingIssuancePerBlock,
+            LiquidityTournamentIncentivePerBlock,
             __SkipField__,
         }
         impl<'de> serde::Deserialize<'de> for GeneratedField {
@@ -55,6 +66,7 @@ impl<'de> serde::Deserialize<'de> for DistributionsParameters {
                     {
                         match value {
                             "stakingIssuancePerBlock" | "staking_issuance_per_block" => Ok(GeneratedField::StakingIssuancePerBlock),
+                            "liquidityTournamentIncentivePerBlock" | "liquidity_tournament_incentive_per_block" => Ok(GeneratedField::LiquidityTournamentIncentivePerBlock),
                             _ => Ok(GeneratedField::__SkipField__),
                         }
                     }
@@ -75,6 +87,7 @@ impl<'de> serde::Deserialize<'de> for DistributionsParameters {
                     V: serde::de::MapAccess<'de>,
             {
                 let mut staking_issuance_per_block__ = None;
+                let mut liquidity_tournament_incentive_per_block__ = None;
                 while let Some(k) = map_.next_key()? {
                     match k {
                         GeneratedField::StakingIssuancePerBlock => {
@@ -85,6 +98,14 @@ impl<'de> serde::Deserialize<'de> for DistributionsParameters {
                                 Some(map_.next_value::<::pbjson::private::NumberDeserialize<_>>()?.0)
                             ;
                         }
+                        GeneratedField::LiquidityTournamentIncentivePerBlock => {
+                            if liquidity_tournament_incentive_per_block__.is_some() {
+                                return Err(serde::de::Error::duplicate_field("liquidityTournamentIncentivePerBlock"));
+                            }
+                            liquidity_tournament_incentive_per_block__ = 
+                                Some(map_.next_value::<::pbjson::private::NumberDeserialize<_>>()?.0)
+                            ;
+                        }
                         GeneratedField::__SkipField__ => {
                             let _ = map_.next_value::<serde::de::IgnoredAny>()?;
                         }
@@ -92,6 +113,7 @@ impl<'de> serde::Deserialize<'de> for DistributionsParameters {
                 }
                 Ok(DistributionsParameters {
                     staking_issuance_per_block: staking_issuance_per_block__.unwrap_or_default(),
+                    liquidity_tournament_incentive_per_block: liquidity_tournament_incentive_per_block__.unwrap_or_default(),
                 })
             }
         }
diff --git a/crates/proto/src/gen/proto_descriptor.bin.no_lfs b/crates/proto/src/gen/proto_descriptor.bin.no_lfs
index f613403ab9..0a7803f013 100644
Binary files a/crates/proto/src/gen/proto_descriptor.bin.no_lfs and b/crates/proto/src/gen/proto_descriptor.bin.no_lfs differ
diff --git a/proto/penumbra/penumbra/core/component/distributions/v1/distributions.proto b/proto/penumbra/penumbra/core/component/distributions/v1/distributions.proto
index 035037e807..d91096d975 100644
--- a/proto/penumbra/penumbra/core/component/distributions/v1/distributions.proto
+++ b/proto/penumbra/penumbra/core/component/distributions/v1/distributions.proto
@@ -5,6 +5,8 @@ package penumbra.core.component.distributions.v1;
 message DistributionsParameters {
   // The amount of staking token issued per block.
   uint64 staking_issuance_per_block = 1;
+  // The amount of staking token flowing from the community pool to the liquidity tournament each block.
+  uint64 liquidity_tournament_incentive_per_block = 2;
 }
 
 // Genesis data for the distributions module.