dYdX v4 Trading Competition Incentives

[finquant]

Summary

Rage Trade’s Proposal for dYdX v4 Trading Competition Incentives

Rage Trade proposes a 6-week ROI-based trading competition on dYdX v4 via its perp aggregator UI. The aim is to boost trading volume and user adoption by leveraging Rage’s aggregator.

The proposal requests $250,000 worth of $DYDX from the dYdX Chain Community Treasury for the V4 Trading Competition Incentives. 100% of these funds will be dedicated to supporting user rewards during trading competitions over 6 weeks, with the goal of increasing trading activity and volume on dYdX v4. Trading competitions, preferred over rebates, benefit smaller users via our ROI-based ranking system.

Rage’s aggregator, having integrated dYdX v4 on April 23, 2024, makes it the first perp aggregator to adopt this integration. This strategic move guarantees seamless participation in competitions, with a strong emphasis on maximizing ROI and promoting active and strategic trading. This initial round will serve as a validation of the concept and will lay the foundation for future competitions, fostering continued engagement and growth on both platforms.

Implementation Plan:

• Weeks 1-2: Launch competitions, set up leaderboards and dashboards for metric tracking, monitor activity, and announce the initiative.
• Weeks 3-4: Optimize competition structure based on performance and feedback, and provide the first community update.
• Weeks 5-6: Continue incentives and prepare final report.
• Post-6-weeks: Release detailed impact assessment and plan future actions.

Project Links:

1. Website - https://www.rage.trade
2. App - https://www.app.rage.trade
3. Twitter - https://twitter.com/rage_trade
4. Discord - Rage Trade (Community)
5. Github - Rage Trade · GitHub
6. Docs - https://docs.rage.trade

Abstract

Rage Trade proposes hosting ROI-based trading competitions on dYdX v4 to boost trading activity and user acquisition. These competitions, inspired by successful initiatives on platforms like GMX v2, aim to provide fair opportunities for traders and drive volume growth.

During the initial round, our goal is to validate our ability to successfully organize trading competitions on dYdX v4, serving as another frontend. Our main objective is to increase trading volume and attract users to dYdX v4 as a direct result of the integration, by leveraging successful strategies such as hosting multiple weekly ROI-based trading competitions, we aim to attract users of all sizes. Upon the success of this phase, we plan to continue organizing competitions and collaborate with the dYdX ecosystem to further enhance the platform

Similar competitions have already proven successful on Rage Trade for GMX v2, achieving record-high daily trading volumes of $8.3m on the competition’s launch day (see image below). Days later, we set new records with total daily volumes reaching $10.3 million, $11.6 million, and $12.6 million respectively. The competition, which kicked off on February 28th, 2024, has been running for over 6 weeks. It has already generated a total volume exceeding $90 million on GMX v2 and is still active.

• Competition: Rage Trade <> GMX v2 Competition
• Stats: Rage Trade Stats

Success will primarily be measured by trader volume and users onboarded on dYdX v4.

Currently, we have:

• More than $500 million in volume
• Over 3,000 users onboarded

Source:

• Rage Trade Stats
• Rage Trade - Dune Analytics

Motivation

Project Description:

Rage Trade is a multi-chain perp aggregator that works across all compatible chains (EVM L2s, L1s, AppChains, Cosmos, etc).

We offer a streamlined trading experience, allowing you to select the optimal trade routes to open leverage trades.

With the Rage v2 aggregator, you can enjoy a multi-perp, multi-chain experience with a UI/UX you are historically familiar with.

Our product offers:

• Aggregated liquidity across all perps.
• Best routing: best price, funding rates, cheapest fee, and token rebates.
• Enhanced bridging across multiple chains and assets.
• One referral link across all perp markets.

Team Members and Roles:

• Product Lead - Founder (https://twitter.com/crypto_noodles)
• Fin Dev - Lead Engineer (https://twitter.com/0xDosa)
• Fin Quant - Head of BD (https://twitter.com/0xAthanase)
• Proto Dev - Backend Engineer
• Senior Dev - Solidity Developer
• Success Daniel Ndu - Data Analyst (https://twitter.com/0x_whoisndu)

About Rage Trade:

The Rage Team comprises dedicated teammates led by Noodles, who started talking about perps on Twitter, showing off how much he knows about DeFi. With that as a starting point, he pulled in some of the best developers. In Rage V1, we introduced exciting vaults such as the 80/20 recycled liquidity Tricrypto vault and the Delta Neutral trader PnL hedged GLP vaults. However, we have now phased out V1 vaults and shifted focus to the Rage V2 Perp Aggregator. Find stats for the deprecated V1 vaults here:

1. TVL
2. Volume
3. Users

We’re all about genuine innovation, even without launching a token. This shows how committed we are and that we’re ready to make good on everything we’ve promised in this proposal.

Our team has successfully designed and implemented several incentive programs, including the ROI-based trading competition mentioned earlier, which is currently active. Additionally, we introduced a 12-week fee rebate program, offering an additional 25% on top of the up to 75% open/close fee rebates provided by GMX.

The 100% fee rebate program ran for 12 weeks from Jan 3rd, 2024 to Mar 26th, 2024. During this incentive program, we attracted over 1200+ traders on GMX v2 and volume rose from $3.5m to ~$200m, reaching a weekly all-time high of $26.6m during the 7th trading epoch between 14th February and 20 February.

Source: GMX Governance Final Report

Source: Dune Analytics

What novelty or innovation does your product offer?

Rage Trade v2 presents a trading experience substantially closer to that of centralized alternatives as we offer services like best price routing (similar to centralized prime brokers and aggregators). We also aggregate competitions, incentives, and referrals — making the experience unified like a centralized exchange.

Our novel approach of prioritizing users and their experience along with incentivization has yielded positive results, with more than 3,000 new traders onboarded and over $500 million of volume generated through our integrated markets since our launch barely four months ago.

Source: Rage Trade V2 Stats

By hosting ROI-based trading competitions, Rage Trade aims to replicate this success on dYdX by offering incentives and rewards to traders, thus fostering a vibrant trading ecosystem on the platform.

Rationale

Hosting trading competitions has proven to be an effective strategy over fee rebate programs for driving trading activity and user engagement based on our experience with GMX v2 on Arbitrum. By leveraging this approach, Rage Trade aims to attract traders to dYdX v4, thereby increasing volume and establishing it as a prominent trading venue. Our focus on competitions stems from their potential to benefit smaller users, notably through our successful ROI-based competition ranking system on GMX v2.

Specification / Implementation / Milestones

This proposal’s 6-week implementation is divided into 3 bi-weekly phases:

1. Phase 1 (Week 1-2): Launch trading competitions and public leaderboard, monitor trading activities, set up dashboards or subgraphs for metric tracking, and announce the initiative.
2. Phase 2 (Week 3-4): Monitor platform performance, trader engagement, and community feedback to optimize the competition structure and incentives, and provide the first bi-weekly community update.
3. Phase 3 (Week 5-6): Continue incentivization and finalize the bi-weekly update leading to a comprehensive final report.
4. Post-6-weeks: Release a detailed report evaluating the proposal’s positive impact on dYdX v4, with future action considerations

We aim to conduct this initial round of trading competitions to validate our capability in successfully organizing such events on dYdX. This initial phase will serve as a demonstration of our ability to drive trading activity and volume on dYdX v4. We’ll analyze the impact of competitions on platform metrics such as trading volume and user growth.

Grant Execution Strategy:

The incentives will primarily be sent to the wallets of winners of the trading competitions.

Only traders trading via the dYdX markets we aggregate will be incentivized. In our trading competition, the playing field is more level as we will use ROI to measure trader success during the competition.

We will follow three simple processes to implement the proposal:

1. Initiate trading competition. Set up subgraphs for metric tracking, and announce the initiative.
2. Regular Updates and Reporting: Monitor and adjust based on platform performance, trader engagement, and community feedback.
3. Review and Analysis: Conduct a thorough post-implementation review to identify improvements and insights for the dYdX ecosystem’s growth.

Addressing Wash Trading:

To mitigate potential abuse and ensure the integrity of our incentive system, we have implemented robust anti-abuse measures. These include sophisticated mechanisms to detect and deter wash trading or Sybil-attack-related incidents. Addresses identified as engaging in such activities will be promptly excluded from receiving incentives.

Moreover, participating in our ROI-based trading competitions adds an additional layer of protection against abuse. Since these competitions are based on actual trading performance and return on investment (ROI), individuals must demonstrate genuine trading skills to earn rewards. This further discourages any attempts to manipulate the system for unfair advantage.

Through these measures, Rage Trade is committed to seamlessly integrating dYdX v4, offering unparalleled benefits to traders.

By implementing these proposals, Rage Trade aims to drive significant growth and adoption of dYdX v4, positioning it as a leading decentralized trading platform in the DeFi landscape.

Ask

The proposal seeks $250,000 notional value of $DYDX allocated for the V4 Trading Competition Incentives from the dYdX Chain Community Treasury

The amount allocated to Rage Trade will be directed towards user rewards, primarily incentivizing trading via trader competitions.

Our main objective remains to boost trading activity and increase volume on dYdX v4. Our preference for trading competitions over rebates is due to their potential to significantly benefit smaller users, particularly through our competition ranking system based on ROI.

Upon receiving the funding, we’ll organize multiple weekly trading competitions, distributing approximately $41,667 per week, totaling $250,000.

Separately, Rage Trade had also applied for a $75,000 integration grant in $DYDX from the dYdX Ecosystem Development Program (DEP) which, we’re pleased to announce, has been approved by the committee. This grant will be paid out in stages upon hitting different milestones. This one-time payment will cover engineering and maintenance costs related to setting up and managing the trading competitions. These expenses are crucial for ensuring smooth operations, platform integrity, and user engagement during the initial phase.

Once this phase is complete and dYdX establishes a referral program, these operating expenses will no longer be needed. The referral program will allow us to generate revenue through trading fees from the order flow directed to dYdX, ensuring long-term sustainability and profitability.

This initial funding request and budget breakdown reflect our commitment to demonstrating the effectiveness of trading competitions as a means of driving trading activity and volume on dYdX v4, paving the way for future collaborations with the foundation.

[RealVovochka]

I dont get why we need another provider of Trading competitions.
75k price tag for organizing this seems very high.
Not only it duplicates @chaoslabs but at a higher price. As far as I can recall treasury paid Chaos Labs 250K for 4 season distributing 20M USD or 1.25%
Here we have 75k charge for distributing 250k or 30%

dydx v4 traffic at rage.trade is non existent basically so far the only party that wins from that is rage.trade

[finquant]

Thank you for your feedback and concerns regarding our community proposal. Allow me to address each point you’ve raised:

1. Cost of organizing the trading competitions:
   The $75k grant is a one-time payment meant for engineering, maintenance, and operational costs related to organizing and managing trading competitions. This grant has already been approved and will be disbursed in stages upon achieving milestones. These costs are crucial for ensuring the smooth operation of the competitions, maintaining platform integrity, and sustaining user engagement during this initial round. Once the initial phase is successfully completed and a referral program is established by dYdX, these operating costs will no longer be necessary. The referral program will allow us to earn revenue through trading fees from orderflow directed to dYdX, ensuring long-term sustainability and profitability.

2. Comparison with Chaos Labs:
   While Chaos Labs did manage trading competitions, it’s essential to understand that they were not a frontend. They were primarily orchestrating the program, whereas we aim to provide a frontend platform for hosting these competitions and managing positions/collateral on dYdX v4. This distinction leads to different cost structures and responsibilities.

3. Increased decentralization and hosting responsibilities:
   By serving as a frontend for these competitions, we contribute to the decentralization of dYdX by providing an additional avenue for users to access the platform, with a seamless UI/UX. Hosting these competitions adds value by expanding accessibility and user engagement.

4. Onboarding dYdX users:
   It’s important to note that we’re still in the process of onboarding dYdX users to our platform. As we continue to grow and expand our user base, the value and impact of hosting these trading competitions will become more apparent.

5. Aggregation of other DEXes:
   Additionally, our platform aggregates other DEXes, providing users with a one-stop-shop for perp trading. Adding dYdX as a route offers advantages for both users and dYdX, enhancing accessibility and user experience.

6. Frontend provider for other DEXes:
   We also serve as a frontend provider for other DEXes like GMX and Hyperliquid. Notably, we’ve generated $253M total volume and 775 users for Hyperliquid, and $257M total volume and ~2400 users for GMX. Our experience in running similar competitions on GMX v2 resulted in over $100M in total volume due to competitions alone from over 1200 participant users. We aim to replicate this for dYdX v4 as well.

We appreciate your input and are committed to transparency and accountability throughout this process.

[CipherLabs]

While we appreciate the enthusiasm surrounding the Rage Trade proposal for the dYdX v4 Trading Competition Incentives, we must respectfully oppose the introduction of another externally hosted trading competition at this time. Our concern centers on the ongoing siphoning of community treasury funds towards initiatives that, while engaging, may not represent the most sustainable or integrated approach to growing the platform.

We are already committed to the existing Chaos Labs competition, which adequately meets the current needs for trader engagement and volume enhancement through competitive means. However, adding another similar, externally hosted competition at this juncture would lead to an inefficient allocation of community resources.

Instead, we advocate for a paradigm shift towards making trading competitions a native feature of the dYdX platform. By integrating competitions directly into the platform and funding them through a portion of the exchange fees, we ensure that the competitions are inherently sustainable and dynamically aligned with the platform’s economic activity. This approach not only enhances financial sustainability but also reduces reliance on centralized third parties, reinforcing the decentralized ethos of dYdX.

We have been steadfast advocates for a more integrated and self-sustaining approach and remain committed to this philosophy. It is essential for the long-term success and health of dYdX that we adopt practices that support continuous and autonomous growth.

We strongly urge the grants team to consider backing initiatives that develop these integrated solutions, moving beyond the existing affiliations that seem to narrowly define the current funding strategy.

[finquant]

Thank you for sharing your feedback on our community proposal. Let me provide further insight on how our proposal aligns with the broader goals of decentralization, platform exposure, and user engagement:

1. Rage Trade can introduce dYdX to a broader audience, including users from other perp dexes like GMX, Hyperliquid, Aevo, and Synthetix, all of which we already aggregate. With over 3200 users and a total volume exceeding $535M across the perp dexes we aggregate, integrating trading competitions on dYdX v4 will incentivize these users to explore the dYdX route, thus expanding its reach and boosting trading volume.
2. It’s crucial to have multiple frontends sending order flow to dYdX v4 to ensure decentralization and mitigate single points of failure. Our proposal aligns with this principle by offering an alternative frontend for users to interact with dYdX v4, managing positions/collateral and participating in competitions seamlessly.
3. While Chaos Labs focuses solely on orchestrating trading competitions, our proposal goes beyond that by offering a comprehensive platform that allows users to not only participate in competitions but also manage positions and collateral on dYdX v4. This added functionality provides users with a seamless experience and enhances their ability to engage with the platform effectively. By integrating competitions into our frontend, we create a unified ecosystem that promotes user engagement and participation while contributing to the overall growth and success of dYdX.

In conclusion, our proposal aims to use trading competitions to expose dYdX to a wider audience, promote decentralization through multiple frontends, and offer users a comprehensive platform for managing positions and collateral.

[RealVovochka]

Personally I get that we my need another frontend and definitely support that.
But in the meantime I think affiliate program must be setup ASAP so community treasury wont be funding each project like that but affiliate fees will be used to attract new users.

[RealVovochka]

I have noted that DYDX Grants has already disbursed $50,000 to Rage Trade. Could we discuss the outcomes of this funding?

According to my data, 62 users have made deposits to DYDX, (transactions with “RAGETRADE” memo) incurring approximately $4,000 in fees. The total deposited amount stands at around $150,000, with one account contributing $100,000 but showing minimal trading activity.

If my information is inaccurate, I apologize and would appreciate it if Rage Trade could provide the relevant statistics.

i tag @RoboMcGobo for visibility

[CipherLabs]

Not much gets under the radar with you @RealVovochka

[finquant]

The $50,000 we received is part of a previously approved $75,000 integration grant from the dYdX Ecosystem Development Program. This grant was structured in three milestones:

1. $25,000 for integrating dYdX.

2. $25,000 for generating $6M total volume.

3. $25,000 for generating $20M total volume.

We successfully integrated dYdX on April 23rd, and generated over $6M in total volume, which is why the $50,000 was disbursed.

Regarding trading competitions, we had success with similar competitions we’re currently running on GMX v2 after our LTIPP was granted. Since June 7th, we’ve generated $72M in volume and onboarded 282 new traders on GMX v2 through Rage.

We aimed to replicate this success on dYdX, but our proposal was discarded due to the platform’s shift to new management and a preference to hold off any community-funded incentives. Despite this, we completed all the necessary engineering work

It’s important to note we have more daily actives on Hyperliquid, Aevo, and GMX. We believe we could’ve converted more to dYdX with trading competition incentives, but its also a good opportunity to ask what can be improved in dYdX product offering to be competitive with newer platforms that have taken market share

Regarding dYdX stats, we’ve aggregated all the order flow info sent to dYdX through Rage on this Dune dashboard. All trade data is sourced from Numia, which we’ve stored and uploaded to this dashboard.

• Total Volume: $6m+

• Total Trades: 873

• Total Users: 82

You can also view all trades and a breakdown of total volume of each trader here:
https://dune.com/rage-trade/dydx-stats/de6cba25-a61d-4a7c-8226-8837e9a785a7

[RealVovochka]

Hi,

Thank you for the detailed reply. My previous post was not intended as a complaint against Rage.Trade.

I have always believed that attracting users should be organized through an affiliate program, funded by a portion of the commissions. This allows any team to clearly assess their own investment and return on investment (ROI) in user acquisition.

If we evaluate the numbers: the protocol paid $50k to generate $3k in fees. It is uncertain how many of these 82 users will stay long-term. In this scenario, Rage.Trade lacks financial motivation to retain these users. This doesn’t seem like a great deal to me. However, against the backdrop of extending the MEV committee (with almost zero accountability) and moving the MEV monitoring dashboard for $275k, the deal looks great

As you mentioned, the strategic management of the protocol has changed, but the community remains in the dark about existing issues. Without full information, we cannot offer informed ideas.

The distribution of funds from the community treasury remains in the same hands, who, despite excellent funding, do not prioritize transparent reporting.

I believe this is unacceptable for a protocol that claims to be decentralized.

[shuo]

Good job. Thank you very much for your concern!

[finquant]

The only measure of our success would be if we could’ve run our trading competitions and offered additional incentives. We’ve done this with other perp DEXes and saw great results in switching users over and boosting engagement.

Without the chance to do this on dYdX, it’s hard to fully gauge our impact. We believe these competitions would have significantly improved user retention and activity.

[RealVovochka]

In this case it seems to me appropriate to use the Arbitrum model in the area of short term incentives. Different teams offer their own options for attracting users through incentives, some discussion is held, ideally onchain proposal. Not as it happens now, when a closed group aka DEP decides to whom and how much to allocate for incentives.