Launch of Season 5 of the Launch Incentive Program

Summary

We are thrilled to mark the conclusion of Season 4 in the dYdX Launch Incentive program and to announce the start of Season 5. This post is dedicated to summarizing the achievements of Season 4 and outlining the enhancements and expectations for the upcoming season.

Recap of Season 4

Comprehensive End-of-Season Report

Chaos Labs has meticulously reviewed the third full trading season on the dYdX Chain, focusing on evaluating the impact of the Launch Incentives Program. The detailed analysis covers all facets of the exchange’s performance and can be fully explored in Chaos Labs’ blog post here.

Key Stats:

  • dYdX Chain has seen over $51bn in trading volume across 67 live markets.
  • Over 5300 traders actively earn points through season 4 of the launch incentive program.
  • Funding rates have been more muted on the dYdX Chain this season. This can be attributed to lower volatility generally.
  • The dYdX Chain has grown to approximately $126m USDC in TVL deposited on the exchange at the end of season 4, up 10% from the beginning of the season.

Incentives Distribution Proposal

As presented to the community in our original proposal, the end of each trading season will result in a Chaos Labs recommendation for incentive distribution per account.

We plan to share this proposal for a community vote in the upcoming week, after a thorough analysis of the trading data from the season, with an emphasis on identifying and addressing any potential wash trading activities. Our objective in highlighting and countering such activities is to ensure the integrity and effectiveness of the program. By doing so, we aim to direct the trading incentives rightfully towards participants who engage in legitimate trading activities on the exchange. This approach is crucial in maintaining a fair and productive incentive structure, which not only rewards genuine contributions to the exchange but also discourages any practices that might compromise the program’s long-term objectives and success.

Launch of Season 5

Introduction and Context

The dYdX community has approved an extension of the Launch Incentive Program run by Chaos Labs for an additional three months, as decided in Proposal 54. To maximize the program’s efficiency over this period, three new innovations will be introduced to align incentives with long-term valuable activities on the dYdX Chain.

Multiplier for DYDX Stakers (Directly or via LSTs)

Summary: DYDX stakers, either directly or by holding an LST, will receive more points.

DYDX stakers typically show significantly higher retention than traders less invested in the dYdX ecosystem. To acknowledge the long-term value of these traders, we are introducing a staking boost. Traders who stake DYDX, either directly or using an LST, will see their points increase by up to 50% at the end of the season. Currently the two live LSTs, stDYDX from Stride, and stkDYDX from pStake will receive boosts in addition to direct stakers.

The boost will be calculated based on the average amount staked over the season and applied retroactively, enhancing the points for DYDX stakers when the season concludes.

Multiplier for Front-End Activity

Summary: Trades executed through one of the front-end interfaces will earn more points.

In Season 5, the incentive program aims to boost rewards for human-executed trading activity. Such activity will be tracked as trades executed via the web, iOS, or Android apps. Trading fees paid for executions through a user interface will receive a 1.5x multiplier.

This change will be applied retroactively at the end of the season, so traders using the front-end interfaces will see their points increase upon the season’s conclusion.

Separate Trading Reward Allocations for Major Markets (BTC, ETH, SOL) and the Long Tail

Summary: Trading fees paid in long-tail markets will receive more points.

Throughout the dYdX Chain Launch Incentive Program, Chaos Labs has aimed to avoid overly prescriptive incentives and maintain balanced trading dynamics. Instead, incentives for all non-major markets have been distributed based on trader preferences, albeit with higher yields following this adjustment.

While we have not specifically focused on bootstrapping liquidity in new markets within this program, the rollout of permissionless markets has required us to adapt to changing dynamics. Traders typically concentrate their activity on the three major markets—BTC, ETH, and SOL—due to tighter spreads and lower trading costs.

In Season 5, we plan to enhance the program by increasing rewards for the other 64 long-tail markets and any new market introduced during the season through a multiplier on points earned in non-major markets. This approach maintains the market-based allocation of tokens while recognizing the value of bootstrapping retail and non-toxic flows in developing markets.

For Season 5, a 2x multiplier will be applied to activity in markets other than BTC, ETH, and SOL. Regular traders who focus on major markets will still be well rewarded, while increased attention will be given to bootstrapping activity in other markets.

Duration and Structure

Season 5 of the Launch Incentive Program will follow a similar structure to previous seasons, spanning 6-8 weeks, ending sometime between July 7 and 17, 2024.

Trading Rewards

Trading points will continue to be weighted by taker fees, with new enhancements: activity in markets other than BTC, ETH, or SOL will earn points at twice the rate of those in major markets. Additional multipliers will be applied for front-end initiated activity and DYDX staking in any form.

Season 5 allocates $3.1 million for trading rewards.

New Deposit Bonus

The limited first deposit bonus of $100 will continue but will be limited to the first 500 new accounts. Should more than 500 new accounts begin trading in season 5, then the 500 new accounts with the highest taker volume will receive bonuses.

In addition, a minimum deposit requirement of $100 is required for users to be eligible for these rewards.

This initiative is allocated a total of $50,000.

Trading Leagues

Due to positive feedback from the past three seasons, trading leagues will continue in their current format. Prizes will be awarded in tiers to ensure fair competition among traders of all sizes, providing clear goals to work towards.

dydxRewardTiers

As before the trading leagues are allocated $800k in Season 5.

Market Maker Rewards

The success of the dYdX Chain is also closely tied to the robustness of its liquidity. Recognizing this, our program continues to incentivize liquidity providers to integrate their infrastructure with the dYdX Chain. The LP reward program is thoughtfully structured to compensate market makers significantly contributing to trading volume. By applying multipliers to impactful liquidity contributions, such as those in less active markets or during periods of volatility, we ensure that rewards are aligned with the platform’s needs. This approach aims to attract high-quality liquidity providers, providing a smooth trading experience for all users.

  1. Eligibility Determination: Identify eligible market makers, focusing on those contributing over 0.25% of maker volume.
  2. Reward Calculation: Assign a reward score to each trade and sum these for each eligible market maker. The reward share for each market maker is then determined as a proportion of the total reward score.

For details on the specifics of how the reward score is calculated, see the Supplemental LP Reward Formula in this post.

As before Market Maker Rewards are allocated $1m in Season 5.

Next Steps

  1. Publication of the distribution proposal on the forums.
  2. Creation of the on-chain vote to distribute incentives.
  • the publication of the distribution proposal and on-chain vote is subject to the finalization of the investigation into trading league positions.
5 Likes

well done! Love how metrics are analyzed to come up with new ways to incentivize trading activity. The DYDX Staker multiplier (which I think fairly rewards protocol stakeholders), Front-End activity (for which there’s very low traffic compared to trades executed via the API) and Long Tail rewards are all great adjustments to the incentive program!

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although I want to comment on how bad the experience is trading on the Web UI front-end, no wonder we have no traffic there and don’t attract any retail. I want to challenge anyone to just ‘try’ to trade consistently via the web UI for a couple of days. I’m not talking about placing one trade and saying ‘it works’, but actually trying to day trade there and submit several orders per day. The shortcomings on trading via the web UI become evident if you’re an active day trader. This doesn’t relate to this proposal or to ChaosLabs of course, sorry to squeeze this in here

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Can confirm for the iOS app. Trading execution is sometimes good but often horrible… It takes too long or often gets canceled/not executed at all (talking about market orders) :woozy_face:

@chaoslabs is there a minimum requirement to be staked to earn that multiplier?

This is excellent news !

Hi @CipherLabs There is no absolute minimum staking amount to earn the multiplier. The actual boost will be a function of the points an account earns and the average DYDX staked, with a max multiplier of 1.5x.

same concern on the quality of web UI, very hard to trade there, for example:

  1. placing order window is too small, user need to scroll down to fill order fields, it should not.
  2. when zoom in the chart, we should show option to close the chart not close the browser
  3. selling/take profit order: should show amount available to sell and ability to sell maximum amount quickly, cannot see this option on UI so I need to go back and forth to check how much amount I have to sell
  4. When filling sell order, not sure why after some sell order it automatically creates buy order instead???
    Big lost to product team, I’m not sure the team is having trading experience by designing that UI.
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Hey, thanks for the thoughts here!

Firstly - want to clarify whether this is via web browser on a desktop, or web browser via mobile device?

The web browser on desktop should already have #3 available. Please look for the SL/TP dialog on the position table. #4 is likely due to the fact that you’re not using reduce only. This should already be the default if you are going through the close position flow via the position table as well (see the “X” icon on the right side of the table).

I’m using desktop browser and mobile ios app.
for #3: I dont need that info on position table, the point is when I create sell order it should allow me to choose max amount to sell quickly(Its Max. xxx under token/usdc amount on UI, please check Binance)
For #4: I used Limit orders so Reduce-only not checkable, I created some selling orders then click “Close the position now” few times that lead to positions closed selling and making NEW BUY that I dont expect, please advise.

#3 - This should already exist. Are you referring to this screenshot?

#4 - Ah ok I understand the issue you had. When was the last time this happened? We should have made an update to prevent that from happening. Let me know if you’re still seeing issues.

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Following community discussion on season 4 distribution, we have updated the criteria for the New Deposit Bonus in the thread with the following changes:

  1. Reduced the number of new accounts eligible for rewards from 1,000 to 500.
  2. Introduced a minimum deposit requirement of $100 for eligibility for these rewards.

thanks, seems I’m confused #3 closed position and making new sell order, all good now.
Please check and update #4, its quite weird. You can dm me on discord @dnguyen2107.

In response to community feedback, we’re excited to announce the following updates to Season 5.

Boost for Staked DYDX

We have been made aware that many large traders on dYdX stake their tokens separately from their trading wallets. To better serve this segment, users staking over 1,000 DYDX in a separate wallet can be eligible for the incentive boost by providing proof of ownership of the staking wallet

To verify ownership of these wallets, users must complete the following form and provide the hashes of two transactions conducted between them, demonstrating control over both accounts.

Removal of Trading Points for FET and AGIX

Following the proposal to deprecate the FET and AGIX markets, these markets will no longer be considered in the Launch Incentive Program trading points. However, market-making points will persist to ensure healthy liquidity.

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We actually love the idea to implement a staked dYdX booster. But we really need to find a better solution than a google form to handle this.
Couldn’t we use standard derivation path of the public keys bech32 format (e.g. dydx1... ) to deduct the hex (0x... ) format ?
We would only require the google form for specific cases when a user is actually staking and trading from two different seeds.

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If the google form information will not be public, such an idea seems wrong to me, it adds another unknown variable to the reward distribution that cannot be verified in any way

After seperate staking wallet get associated with trading wallet. will the staked dydx from trading wallet will also be counted?

@RealVovochka - Similar to other data considered for reward distribution, the information on linked accounts will be made public.

@rosicky—yes. However, it’s important to note that each trading wallet can only be linked with a single staking wallet. Therefore, if users have DYDX staked in multiple wallets, they can only link one of these to their trading wallet to earn points.

that each trading wallet can only be linked to a single staking wallet. This means that if users are staking DYDX in various wallets, they may only link one of these to their trading wallet earning points.