I just wanted to share some thoughts about how we might improve the incentives strucrure of the trading comp.
In my opinion it is key to keep it simple:
Liquidity miners need to be able to calculate how much they can gain with a certain amount of effort.
If there is no cap to the incentives structure, putting more effort in creating volume will translate in (unlimited) more gains and therefor more volume on the exchange.
I also think that being able of purchasing (a lot) more tokens of popular (Eth) projects would lead to more adoption.
Only thing ofcourse is that there needs to be an incentive for providing liquidity to these new TP’s, but that’s something we can built into the incentives structure.
My idea is very simple. Set a reward for every dollar of volume provided on the exchange for example 0,0016, in other words 1,6 per 1000 volume
After 24 hours fees are calculated and paid. So if total volume that day is 100.000 000, a total of 160.000 in rewards will be paid
the mechanism that will incentivise all trading pairs is that there is set a percentage to all TP’s. This is the percentage of all rewards that will go to that specific TP.
In that case you can predefine a number (%) that you would like to see traded on the exchange for each trading pair. if the actual trading volume is lower, rewards will get higher. If
trading volume exceeds this goal, rewards will reduce and other TP’s will get more profitable compared to that one.
For example:
On the exchange are 4 TP’s and in this case we will reward each trading pair equally.
TP’s: 4 (each rewarded with 25%)
rewards: 1,6 per 1000 volume
So let’s take the data above as an example:
Let’s say total exchange volume that day is 100mio, with TP A providing 60 mio volume, TP B 20 mio, TP C 15 mio and TP D 5 mio
Total rewards are 160.000 and distributed To each TP 25%, so:
TP A 60mio 40.000 rewards 0,67/1000
TP B 20mio 40.000 rewards 2,00/1000
TP C 15mio 40.000 rewards 2,67/1000
TP D 5mio 40.000 rewards 8,00/1000
every 24 hours will be calculated if and how much rewards each person will receive.
This basic strucure can easily be finetuned, for example you could:
Set additional conditions for a person to be elligible for rewards for example a minimum of 20.0000 volume a day.
If this condition isn’t met these rewards will go to the exchange…
Include seperate rewarding for makers/takers like in the first edition of liquidity mining. This way you could set rewards higher for the taker side and therefor incentivising people
to also use taker strategies.
etc…