Brainstorm new program: fixing missing incentive design

Hi all,

I would love to learn and receive ideas from our community in a new incentive program. My hope is to present the current idea and see what is the excitement and how it is perceived - to receive critics that helps improve our plans. I am convinced that the collective knowledge of the community on other incentive programs is many times greater than all research time I can devote.

There is a small but fundamental flaw on the incentive design of the NEX token, it rewards regardless of involvement on the community. Meaning it will pay 75% of revenue as dividends even if you just stake and disappear - or worse even if you try to damage Nash. Yes, there is a implicit incentive - but it has shown to be too subtle, people with lower time preference will completely disregard any implicit incentive of a future gain. Yes, we are 100% about bringing finance to everyone, but our goal is to reach that with products and services - the NEX token is primarily a method to reward the community to join us in this pursue of building an open, fairer option in the industry.

So long story short the past few months we have been hard at work on implementing and designing three programs to close the gap on incentives:

  • A new public market makers (MM) program: its main goal is to bring several professional crypto MM to port their existing systems to work with Nash and try our product. Increasing Nash footprint and market share in the liquidity industry - so we added a set of incentives for crypto MMs. We launched it and discontinued our previous private program recently and you can read about it here: https://blog.nash.io/paid-market-makers-program

  • A new referral system: its main goal is to reward individuals that help spread the word about Nash and bring active users to our platform. It has been iterated with two sides of the industry, the ones knowledgeable with crypto influencer marketing and companies building software atop Nash platform. We will launch the program as part of our GA plans.

  • A new liquidity farming program: its main goal is to reward people that take an active role in using the trading platform - be it as a professional trader, a directional trading firm (such as a fund) or our amazing community bootstrapping usage. Is this program that I want to present the first drawings of the idea in this long post and work together with our community.

Liquidity farming

There have been several innovations in crypto - and a few players have conquered sometimes surprisingly more than some would expect due to the merits of their innovations.

One of such recent innovations is the Uniswap pool reward system - it solves the problem of explicit incentive to users providing liquidity to the platform. However it works-as-it-works in Uniswap because it has no order books, so users can all be part of a “poll” and they are all equally “at the tip” at the market, as a combination of oracle prices and bonding curve defines the price in Uniswap. That is not technically possible on Nash as we are a real limit order book exchange.

Several other players have since used the same mechanism to bootstrap usage on their platform - with one additional twist, by the reward for participation would tokenized and paid in the form of a new token - in most a governance token. This is called yield farming and examples are many but main innovator was Compound.

So borrowing on the ideas of liquidity mining (Uniswap) and farming (Compound) we have been playing with a program that combines both into a liquidity farming program.

Basic structure:

  1. Every week a defined reward in NEX (told in advanced for the month) would be defined. Let’s say an example would be 10,000 NEX for the month of September, with 2,500 NEX for every week.

  2. At the closing of the week two rankings would be built - one of takers and one of makers - team, partners and participants on other incentive programs excluded.

  3. The week reward would be split proportionally to each user take was either taker or maker, with 50/50 split of rewards between both sides. Paid directly to users state channels.

To support the program Nash would be provinding technical support in the form of ready-made bots and partnering with bot providers (and other automated execution services).

Questions:

How exciting is this to our community?

We have no plans to issue new NEX. Any version of this program will test without any inflation. But some projects have been successful to fund their staking and incentives with inflation (like ETH and BTC) - should this be NEX minted? If issued should it instead of paid to state channels be delivered as staked NEX for 1y or 2y? We keep same total supply and have a burn/mint curve a la BTC or a no limit work-reward like ETH?

Other solution ideas to solve this dilemma?

Sorry for the text wall, I am trying to brainstorm with 100s of crypto investors :stuck_out_tongue_closed_eyes:

29 Likes

Dear Fabio. I find your idea interesting, but also unneccesary on this scope. In order to bring liquidity and volume to Nash there are certain moves that can be undertaken. Paths are many but the goal is one.

  1. Arbitrage & MM bot providers need to be made compatible with Nash in order for community to pitch in. (hummingbot comes to mind) You can rewards the parricipants if you so wish.
  2. Professional MMs as I understand are a work in progress and a welcomed one at that
  3. Nash savings accounts would incentivize people to keep their funds on Nash and while they have them here they will do at least some trades here aswell. Given that interests are big enough.
  4. We have 1 respectable pair out of 1 or 11 and that is BTC, which has poor volume at most. We will need to acquire more pairs, preferably high volume ones first, we want to be the place where people can get what they want.
  5. TRAC has been listed recently and as I understand their nOS app will have automatic fiat to TRAC purchases for their users. I would love to see it being through Nash… If there are other such possibilities with other projects they would be most welcome.
  6. Fiat gateway as I understand is getting sorted
  7. Once all that is sorted look into margin trading, look to utilize savings accounts as lending to traders against fees etc…
  8. Please no nex inflation, this would upset most of holders.
    Most of these things are being worked on and will contribute to the success, until thes are finalized there is no need for more drastic solutions imo.
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Unless I am missing something, do any of these ideas involve the smaller user of Nash? AKA someone who holds NEX and stakes their NEX, trades occasionally, and is active in the community. It seems like all these new ideas are for the big players and wouldn’t really change things for smaller people who stake their NEX. Or is it just that all of this would lead to more users and volumes thus more staking revenue for holders?

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One thing I would not even think about is adding inflation to the NEX token - I am even not sure if this would be legal considering the fact that NEX is a security token.

My personal opinion is that it would be better to “reduce” the percentages for NEX holders slightly and use the difference to incentivise the liquidity farming program.

E.g. NEX which are staked for 2 years receive 75% of the fees right now - reduce this to e.g. 60% and use the other 15% for the liquidity mining program.

ANY changes regarding this should be done based on a vote by NEX holders - a simple smart contract based poll.

I really like your ideas regarding the new MM & referral programs though. More pairs like Marane mentioned would also be great.

1 Like

thanks for the input @Marane I will reply in place.

  1. That is in the works regardless, we already have some and as I commented will continue to supply tooling. Of course we hope the implicit incentive is good for most - but this is an additional explicit incentive that we are seeking to close the loop.

  2. Yes, this is for community and retail users.

  3. Savings, Cash and Pay are certainly products that feedback into the exchange - but those are for extracting and providing value to a different profile: holders. This conversation here I would like to have everyone on the mindset of incentives for the trading protocol.

  4. More pairs don’t mean more volume, this is not an existing correlation unfortunately - most of the times listing cost more than it generates, there are several nuances to listing more pairs - if not we would aggressive list a lot. I would say pairs like ETH/USDC, ETH/BTC, NEO/USDC, NEO/ETH and USDT/USDC are certainly respectable.

  5. I too would love that :smiley:

  6. Yes

  7. Again like on topic (3) this are products for a different profile than we are targeting in this discussion.

  8. There is no change to max NEX supply. The idea is to use company NEX. But one could see several cases of mint/burn - like for example: one could “unstake” by burning and that would be minted on the liquidity farming. Is this kind of ideation I wanted the community to feel free to bring up.

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Like the ideas. Utility Token we can call it Nash. It is a great idea for some Utility stuff like lower the fees. I think we shouldn’t change anything on the Nex token and make an Utility Token for all incentive topics. The Utility Token should be a stable coin

For liquidity farming we need a great Bot the best way would it to integrate this Bot directly in the App that everyone can run an Bot without knowledge about anything. The pingpong bot is a good start for this. (When there isn’t a legal issue to do so).
For running this Bot you get some of the utility token, an other way would be you get each X amount of Dollar volume X amount of the utility token.

The idea I put forth here is applicable to all users besides team and partners.

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Alternatively Nash could make a liquidity pool and deploy their own bots to MM and arbitrage… Lets say 3 point arbitrage with 2 other exchanges to have current prices. NASH community could then deposit funds into such a pool for determined amout of time and get rewards… Should it be new governance token of some sort or USDC it really doesn’t matter as much. I’m not sure if Fabio described something similiar, I guess the difference is NASH would run their own operation in my scenario and nex would still serve as a claim to the portion of the fees while liquidity pool would be a separate thing.

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Guys, let’s avoid drama, there is no diluting inflation happening - I am a big staker also, that is how I plan to earn from Nash so we are all aligned there.

@Cornelius interesting proposal with reducing fees, that would make NEX more of a governance token as well. My concern with that kind of poll is that part year we have seen concentration (small selling and average size of wallet increasing), so a few dozens would be the ones actually taking decisions. Maybe that is okay as well, since they also have more skin in the game.

Regarding reducing fees in itself is this an implicit comment to maybe instead of rewarding in NEX rewarding in fees? So making it more of a “rebate”?

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good idea, I just wouldn’t give the NEX reward because many would then sell the token creating price dumps

make stake design like this… 75% stake reward change to 50%… then 25% of it used to buy nex and then burn nex(stake nex forever) for trader incentives or promo
ignore my idea if its bad
let me know if this idea bad or not… i will delete this message immediately if its so bad

My original idea to incentivize users to use Nash was to add active earning on top of the current passive earning (=stake):

So if someone stakes for 18 months, his passive earning factor is 61.956%. Additionally, in the last 30 days he:

  • has traded a volume of $10,000, which yields him an extra 2% (=log(10^4)/2)
  • has paid $500 via Nash Pay, which yields him an extra 1.35% (=log(500)/2)
  • has deposited $1,000 via Nash Cash, which yields him an extra 1.5% (=log(10^3)/2)
  • has provided liquidity of $1,000 via the liquidity program, which yields him an extra 1.5% (=log(10^3)/2)
  • has referred users who amount to a traded volume of $100k, which yields him an extra 2.5% (=log(10^5)/2)

In the end, he will earn 61.956 + 2 + 1.35 + 1.5 + 1.5 + 2.5 = 70.8%.

The logarithmic functions make it so that “smaller players” can feel that they too can benefit from it.

That is a very “integrated” approach and I’m sure it comes with many complexities, but I’m putting it out there just in case it can inspire some :slightly_smiling_face:


Back to your idea Fabio. I need to give it more thought, but my first idea is that the community could be more involved in the reward structure as a way to 1/ be included 2/ show their commitment:

The NEX reward each month could be matched by Nash (within a predefined limit) for every stake created the last week of the previous month, weighted by the staking rate.

Also, I like the idea of the reward being staked NEX very much (1 year sounds good, like Synthetic).

21 Likes

I think it’s worth a try. Maybe it can just be something that 's given a trial for one month only. Then at the end of that month we determine if it had any legitimate impact on volume before continuing. The idea of getting rewarded Nex for trading is appealing. One suggestion I would have that could maybe create more interest/urgency/fomo is create a ladder scale instead of equal amounts. Where in the first week the smallest amount of Nex is given and the second more and the third more and the fourth the biggest amount. So that way as people slowly hear about it they get more interested and anticipate the big week at the end of the month. That’s my attempt at psychology :joy:

So say it’s 20K Nex for September

Week 1: 2K
Week 2: 3K
Week 3: 5K
Week 4: 10K nex up for grabs “:tada:woo hoo, crazy fomo time!”

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thought about this too, but really 10K Nex isn’t that much to get dumped on the market. We get whales dumping 30K+ Nex all the time. And maybe some of the winners stake instead of dump.

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Hello @canesin,
I really do like the market makers (MM) program and a potential new referral system. Especially the latter (sadly!?) seems to be important to get the attention of influencers (like youtubers) as they only report about and recommend exchanges when they can get monetary gains from it (like all the people shilling their bybit ref links- f.e. crypto zombie. They can repeat that they are here for the tech, but they arent. They are here for the money and ref links allows this).
So yeah, I really do like the first 2.
Regarding NEX token and the Liquidity farming:
I am 100% against NEX inflation and saying “Any first version of this program will test without any inflation” makes me worry as it sounds like it’s already in your plans and this is just to make people already get used to the idea. Like it’s not in the first version but in the second.

To me this is (and was) not a flaw but a feature. And it was part of the decision to take part in the token sale. From my point of view people contributed money to finance the team in building the platform until it can finance itself. And to get part of all future fees in return as in incentive to contribute. Regarding NEX token gains there shouldn’t be any obligation to contribute anything else. And saying this, I still have contributed more than my money. I talked others in your ICO, helped testing, gave feedback, have more than 250 referral entries, wrote countless twitter and other comments fighting fud, spent a lot of time with writing a very very very ( :slightly_smiling_face:) email conversation with your support and used your exchange. Why? Cause I like your vision and want to help AND I want to see my initial investment to be a success.

*edit: I will be very happy about every new, additional incentive “to reward the community to join us in this pursue of building an open, fairer option in the industry”!

This is only my first (usually more emotionally reaction to your post). I will for sure question my thoughts after I have let your ideas sink in a bit more :wink:
Regards.

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Maybe we can start with achieving our initial goals and milestones before we start talking about changing token economics. Changing our initial tokeneconomics is this fase are worrieng me.

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On a first thought, I really like this idea way more. Cause like you said, it prevails the NEX token feature of passive income and gives the new additional incentive of active earning I previously said I would be happy about.

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Very nice idea.

what you say is true but I would prefer to pay them in btc or otherwise, if they really believe in the project they will buy NEX, it makes no sense to risk

Well @Oldsport you described nicely what I had in mind with my earlier post.

This setup is basically what other exchanges like BITPANDA have integrated recently (lookup their BEST token - the % there are also based on your BEST holdings and trading activities).

I am not sure however if it makes sense to include NASH PAY and NASH CASH into the “active earning factors” - these two are completely separate products. I would keep it simple and include “provide liquidity” and “trading” in the “active earning factors” - this benefits our two most relevant target groups - traders & market makers.

Now regarding the rewards itself - I am not sure if it would be more beneficial to issue “staked NEX” or just the fees itself. The advantage of rewards in form of fees would be that a liquiditiy provider receives all the different currencies as the regular NEX holders do. These fees will then either be reinvested (= providing even more liquidity) or likely be traded (e.g. everything into ETH before it is withdrawn). In both cases NASH profits.

One more thing @canesin - if rewards would be issued in fees why don’t you add a button “Convert into NEX”. I know we cannot trade NEX on NASH due to legal reasons but would it be a problem to offer a function where a user selects one / several of his assets on NASH and by executing this function you convert these assets to NEO, convert them to NEX on SWITCHEO and send them back to the personal / trading account of the user?

=> Would that be possible from a legal point of view?
I am asking because that would give liquidity providers / traders another incentive because they have an easy possibility to participate even more (by staking NEX) AND the buying pressure on NEX would possibly increase.

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