Trade & Liquidity Mining
Trading rewards are distributed to each market in real-time. When each trader opens or closes a new position, we calculate:
Trader cumulative notional += |notional| × (1 + Trader staked LP / Total LP staked)
AMM cumulative trading notional += |notional|×(1+ Trader staked LP / Total LP staked)
In the formula above, (1 + trader staked LP / Total LP staked ) is the trader boost multiplier. This is used to boost rewards for traders who stake in the same market. Traders who stake will receive the most rewards, hence we encourage everyone to trade and stake to get the most boosted rewards.
For each market, all traders will share the trading reward proportionate to their valid cumulative trading volumes.
In the beginning, reward pools will be distributed to Traders, AMM stakers and Insurance stakers with a ratio of 1 : 1 : 1.5.
Trading volume is accumulated and reset every day. At the end of every day, every trader’s accumulated trading volume as well as the market’s accumulated trading volume will be reset to zero. The reasons for this system are several:
- Firstly, in the case if we notice abuse with the rewards system, we can quickly readjust in the next period.
- Secondly, we want to encourage fair use of our protocols, and build a level playing field on Strips. In order to do that, it is fairer to have a daily reward epochs.
- Once a trader stops trading on Strips for more than 1 day, the trader will no longer receive any trading rewards.
To conclude, the more a user trades and stakes on Strips, the more rewards he/she will receive. Traders will receive rewards as well as stakers, and traders who also stake will receive the most rewards. Not to mention that traders can use leverage to increase their trading volumes and hence trading rewards.
In order to encourage a healthy marketplace and discourage wash trading, we have implemented a minimum trade holding period of 10 blocks.
When each trader closes or partially closes their position, or gets liquidated, we update: trading interval = current_block − block_prev_trade
If trading interval is less than 10 blocks, then we will classify this trade as wash trading, and the trading reward will be 0 for this trade. If the trading interval is greater than 10 blocks, the trader’s cumulative trading volume will be added as per normal.
The AMM includes all trades in its cumulative trading volume. As wash trading still pays trading fees to LP holders, these volumes are still valid. Hence, wash trading benefits LP holders while penalizing wash traders.
We will monitor the speed of token distribution: given we count wash trade volumes into market volume without rewarding STRP tokens to wash traders