Proposal on further tokenomic details: Trading and token holding incentives
Brief
This proposal goes into further details over EMDX tokenomics, focusing on the following subjects:
- Distribution system adjustment
- Setting competitive incentives by:
- Decreasing protocol transaction fees
- Distributing platform fees
- Looking for a balance between trading and token holder reward systems
- Specifying staking conditions in order to accomplish strategic objectives
Background
One of the critical points for tokenomics design is the ability to incentivize the community to engage with the protocol in a healthy, sustainable way.
EMDX protocol mainnet launched on June 20th 2022, and since then it has been proven that its platform offers the highest quality standards. This lays the groundwork for moving forward with the design of the incentive system. If you are not yet familiar with EMDX Macro Tokenomics, pls check it out here.
Distribution system adjustment
We are suggesting a new distribution model (much more straightforward) and basically with the same effects. The previous model was based on percentiles, meaning that our relative position within the CMC DEX Rank would release a specific % of tokens.
The following is an example of the previous distribution system:
This aforementioned system can lead the protocol to distribute a massive amount of tokens under some extremely (and exceptional) good circumstances. To avoid this undesirable situation, the system’s token distribution was capped with a maximum 4% bimonthly release.
As you can see, this scheme is a bit intricate, so we thought it would be easier if we use Quartiles references, as follows:
Formula
Rationale behind EMDX incentives
Some top dexes (like dYdX) are mostly focused on TRADERS, missing out NON TRADER community members, while others pivot mainly on LPs while leaving out TRADERS.
EMDX is proposing to benefit both, traders and non traders (the 2 types of community members) in a BALANCED, EFFICIENT WAY.
So, in order to REWARD:
- Traders
- Market makers
- Token holders
We allocate the following percentage of tokens out of the total supply
Basics for Competitive Incentives
The market of “derivatives dexes” is becoming highly competitive, so not only there is no room to overcharge users, moreover dapps should work on how to compensate them accordingly.
That is why EMDX should:
- DECREASE FEES through rebates as follows:
By doing so, EMDX can:
- Outperform DeFi competitors who keep charging excessively
- While also become competitive vs CeFi & hybrid derivative exchanges
To obtain the benefits of lower fees, traders must hold a certain amount of token, as shown in the graph above.
- DISTRIBUTE PLATFORM FEES
- 30% of the platform fees should go to those who stake their holdings.
(see more details about it below under the Vanilla Staking title)
TRADING REWARDS
Token Rewards should be backdated to the EMDX launching date (June 20th).
It will fairly reward those pioneers who have been supporting actual trading on EMDX since the protocol was launched on mainnet.
Meaning that from June 20th, 2022 on, based on the value-ratio formula, up to 4,5% out of the 20% allocated tokens, might be distributed among them according to the Rewarding Formula:
Trader Score = Trader’s Volume / Total Volume
MARKET MAKERS REWARDS
As EMDX plans to set up a Central Limit Order Book derivative and spot trading exchange, the protocol must boost Market Makers to join the ecosystem.
Although, more detailed and granular variables should be consider ahead, we can start by setting these principles and guidelines for their system reward:
Conditions
-
Token distribution should be Pro-rata based
-
Basic parameters to take into consideration are:
- Market depth (two-sided)
- Order Spread (around the quote midpoint)
- Order quantity
- Uptime required
- Formula
Market Maker Score = MM’s Volume / Total Volume
STAKING
1. Vanilla Staking
All stakers Receive Pro-Rata Based
- 30% of platform fees will be distributed monthly via AVAX to EMDX stakers
- (fees distribution will start at a lower %, and will increase up to 30% along the first year)
- Once this proposal is approved and the staking contracts deployed (even before our TGE/IDO event takes place) those who decide to stake their aEMDX tokens for up to 6 months, will start getting 3% of monthly fees from there on.
- 1,875 % of EMDX tokens (1/4 of the 7,5% staking pool)
- 14 days cooldown period
2. Super Staking I: Insurance Pool
Stakers can also upgrade their rewards by applying their staked tokens into the IP (Insurance Fund)
In this case they will also receive Pro-Rata Based
- 25% of liquidated positions
- 1,875 % of EMDX tokens (1/4 of the 7,5% staking pool)
- 14 days cooldown period
3. Super Staking II: ARB Pool
Stakers can also upgrade their rewards by staking into the ARB POOL
Will also receive Pro-Rata Based
- 50% of arbitrage trading profit
- 1,875 % of EMDX tokens (1/4 of the 7,5% staking pool)
- 14 days cooldown period
4. EMDX Subnet Staking
- Further details will be discussed under a special proposal related to the EMDX subnet’s economics.
Should we pass this proposal to MGV (Motion Granted for Voting)?
- Yes
- No
0 voters
19.09.22 Update:
After been approved on the CMS Phase, the proposal advanced to the MGV (Motion Granted for Voting) stage. Tokenholders can now vote on Snapshot .
22.09.22 Update:
The proposal was approved on the Snapshot last phase, indicating that it has passed.
