The basic idea is adding weekly trading rewards to attract new traders to https://synthetix.exchange/ as well as to encourage SNX minters to actively trade their synths on the exchange.\nUltimately, the goal is constant growth in exchange usage and volume.
\nThe idea of staking SNX was always to be profitable based on trading fees distributed to stakers.\nAs an intermediate incentive to encourage staking until the exchange achieves mass adoption Synthetix has introduced inflation rewards.\nThis proved to be an excellent incentive, and currently those weekly inflation rewards are the dominant reason ~ 87% SNX is staked.\nThe weekly sUSD fees represent pennies on the dollar for stakers, and in most cases dont even justify the gas price to claim them.
\nIt was always clear that inflation is not the longterm solution to attract and keep stakers, or at least it can not suceed by itself.\nAfter a year of building a great community of stable stakers and getting the exchange features to the sufficient quality and diversity (in terms of synths available) level, it is time to aim for mass adoption.
\nA good starting point to build exposure and attract new traders is to introduce a rewards system encouraging trades.\nThe idea is to divert (invest) some fees or inflation to reward top traders taking into account both the success of the trades, but also the volume they created on a weekly level, thus encouraging active trading.
\nThe idea is to build this rewards system by making it as simple and as seamless for traders as possible.
\nThe rewards should be weekly, either on a Monday-Sunday level, or following the existing staking snapshots.
\nWe would define three categories for rewards depending on the weekly generated trading volume of a wallet:
\nThe only thing that the traders need to do to be eligible for weekly rewards is to trade at list 100sUSD worth of weekly volume.\nAll whales are eligible for dolphin rewards, if they haven't won any rewards in their primary tier.\nSame applies to dolphins in regards to shrimps.
\nSuggested rewards in SNX per category for first 3 (5 for shrimps) places are:
\nTotal: 9.35k\nThe boost in volume required to justify the funds spent on rewards: 3 million
\nAs already explained, the idea is to have this system working seamlessly for the traders.\nThat means that they dont need to worry about disqualifications, as there would be none.\nTraders are free to do with their wallets as they wish, meaning they can add or remove synths at any time.
\nAs the motivation is to boost trades, for rewards ranking the fees generated by a wallet will be added as its gain.\nIn addition, there will be a bonus trading quotient based on how much volume the wallet has divided by the category threshold, up to 10%.
\nWallet start balance is the value of his synths at the starting block per oracle prices at that block.\nIf during the week, the wallet adds new synths, their value at the block in which they were added is added to the starting balance.
\nWallet end balance is the value of the synths at the ending weekly block plus the fees the wallet generated during the week (as we dont want to penalize traders in the rewards system).\nIf during the week, the wallet moves away some synths, their value at the block in which they were moved is added to the end balance.
\nThe percentage weekly gain is: ((endBalance+feesGenerated)tradingQuotient-startBalance)/startBalance.\nWhere tradingQuotient=tradeVolume0.01/tierThreshold+1\nMaximum value of the tradingQuotient is 1.1 (10%).
\nAlternative solution was embedding a fortnightly trading competition as it was organized before into the exchange itself and having onchain registration and rewards claims.\nThis means more implementation effort as well as more actions for traders who would then have to worry about creating a clean (sUSD only) wallet to begin with, as well as worrying about disqualifications.
\nIn trading competitions as they were organized before, traders would think very hard about changing their positions, taking into account that 0.3% is deducted from every trade.\nAs we want to maximise the number and volume of trades, this should not be deducted from the gain in the ranking system.
\n| \n | Start balance | \nEnd balance | \nTrading volume | \nFees generated | \nBalance+Fees | \nBonus(%) | \nBalance with bonus | \nGain | \n
|---|---|---|---|---|---|---|---|---|
| John | \n1000 | \n2000 | \n9000 | \n27 | \n2027 | \n9 | \n2209.4 | \n120.9% | \n
| Paul | \n2000 | \n3500 | \n3000 | \n9 | \n3509 | \n3 | \n3614.3 | \n80.7% | \n
| Jane | \n1000 | \n1500 | \n1000 | \n3 | \n1503 | \n0 | \n1503 | \n50.3 | \n
Lets reuse the example above but imagine John has moved sETH from his wallet during the week.\nAt the block in which it was moved, this sETH was worth 200sUSD.\nHis starting balance will stay the same, but we will add those 200sUSD to his end balance as to correctly calculate the gain.
\nLets also imagine Paul has added 100sLink during the week. At the block in which they were added sLink price was 4sUSD, so 400sUSD is added to his starting balance.\nAs the price of sLINK has risen and is worth 5sUSD at the end of the week, his ending balance is increased by 500sUSD;
\n| \n | Start balance | \nEnd balance | \nTrading volume | \nFees generated | \nBalance+Fees | \nBonus(%) | \nBalance with bonus | \nGain | \n
|---|---|---|---|---|---|---|---|---|
| John | \n1000 | \n2000 | \n9000 | \n27 | \n2027 | \n9 | \n2209.4 | \n120.9% | \n
| Paul | \n2400 | \n4000 | \n3000 | \n9 | \n4009 | \n3 | \n4129.3 | \n72.05% | \n
| Jane | \n1000 | \n1500 | \n1000 | \n3 | \n1503 | \n0 | \n1503 | \n50.3% | \n
Now if John wanted to continue trading once he reached 9999sUSD trading volume, he might feel discouraged as he loses his current trading bonus.\nThis is why all whales will still be considered in the dolphin category, provided that they didnt win any prizes in the whale category.
\n| \n | Start balance | \nEnd balance | \nTrading volume | \nFees generated | \nBalance+Fees | \nBonus(%) | \nBalance with bonus | \nGain | \n
|---|---|---|---|---|---|---|---|---|
| John | \n1000 | \n2000 | \n11000 | \n33 | \n2033 | \n10 | \n2236.3 | \n123.6% | \n
| Paul | \n2400 | \n4000 | \n3000 | \n9 | \n4009 | \n3 | \n4129.3 | \n72.05% | \n
| Jane | \n1000 | \n1500 | \n1000 | \n3 | \n1503 | \n0 | \n1503 | \n50.3% | \n
The SIP is written with the idea to minimize the implementation effort, thus requiring no on-chain computations.\nThe effort resides in reading the data correctly off chain and creating the leaderboard page on the synthetix exchange.
\nRewards distribution can be done manually in the trial period.
\nCopyright and related rights waived via CC0.
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