Trader Incentives [WOO HOO] - Brainstorming!

[issabobissa]

Hi all-- a few of us got to chatting again about TRADER INCENTIVES. Personally, I am very excited to see our gains (VOLUME, + $FEES) based on the development of these ideas.

1. We need more TRADERS on Bancor
2. We need more AWARENESS about Bancor now more than ever.
3. Personal opinion: We shouldn’t let V3 timelines get in our way-- I believe they are mutually exclusive in this case.

TLDR

• I am proposing a short term trade incentive campaign by kicking back BNT to any person that trades directly on our DEX.
• Specifically I want this feature to be used for low volume/fee pair pools with the following set of variables (which would determine Trader BNT reward emissions):
  • Limit orders to start conservative
  • Limit order Time (variable) – until it gets filled, you can earn rewards
  • Trade size
  • Short timing bursts (see detail below)
• Make small ‘trading’ LM pools for these trading BNT kickbacks
• I’m betting the tech for this exists and can modularly be implemented in the v2.1 short term, let’s get those traders!
• This proposal is it’s very early stages and open to suggestions and feedback holistically, I encourage those with thoughts to engage!

IMPORTANT QUESTIONS [Ilyssa, Discorp, Glenn, JM]

• Should we do this before V3?
  • It is probably worth doing when V3 launches for a short period of time to bring in new folks (as long as they trade directly on Bancor).
• Can we use protocol owned BNT? Why not from the protocol owned though, it will be insignificant in the grand scheme of things no?
• I’m just saying, it would be something SOMETHING is better than nothing while we wait and CAN afford it

FOR [Ilyssa, Glenn, rando rando, Mach, Just Link It]

• I’d like to do micro-airdrops for limit order trades, or give them some rewards/incentives WHILE they wait to be filled.
• Maybe we take away from LP incentives a small percentage until V3, allocate that to giving micro BNTs or BNT rebates for trades.
• That way they will also be incentivized to come back, V3 or not (dont h8 me!- aware this is Bancor blasphemy, but just an idea)
• Yeah, we can do it (other platforms have done similar incentives so it shouldn’t be too difficult to implement I think).
• rando rando: would bancor ever do an airdrop? Might be a good idea to promote traders to the platform after v3 drops. Something like wallets who made > 5 transactions get an airdrop
• Mach: Incentivising trade is smart, I think we should do it, even if just to raise awareness, see what airdrop did to uniswap, it’s mad.
• Just Link It: Just retroactively airdrop bancor traders and the marketing will pay for itself, sure we will have a drop in price but we’re long term. right guys…

REASONING

• We can agree from the data that LPs & Traders aren’t utilizing the feedback system as exactly we’d like them to— we aren’t getting the traders, for whatever reasons.
• I’m still new to the space, but I get the feeling that trading and LP mentality are very different, on a spectrum especially in DeFi
• Cost vs. benefit, 80/20-- I believe short-term, micro LM dual-sided rewards for LIMIT order traders could strongly incentivize trading on Bancor— this features actually meshes well with upcoming LP features, i.e. dual sided LM!
• What if, for a little while, we give BNT to traders First, not LPs— for a BIT to bootstrap their BNT bags and Bancor’s Volume until V3 and multichain launches, etc.
• REMINDER: This is SHORT term-- either until V3, or just a couple weeks. We want awareness and traders right now and would love to hear the community’s thoughts!
• I should note the most exciting part to me! If selected communities are down, they can contribute to rewards dually-- that can also be a basis of choice for which pairs we want to support.
• Another way to think about this:
  • Consider relative trade off of the status quo— Are the rewards of more traders, and thus more fees, UNTIL V3, at the cost of small airdrops incentives, worth making up for that loss?
  • If volume is increasing anyway and will continually once V3 launches (which is true).
  • It could be that the airdrops are negligible but they have a great impact on volume, enough to propagate exponentially when we hit traders with V3.
• It can’t hurt us at this point!!! We’ve waited a long time, and the market (traders) are telling us what they want-- even if it’s small airdrops.

SUPPORTED / SUGGESTED MECHANICS [Ilyssa, Glenn, Discorp]

• Can we create a pool that has tiny single-sided LM? That’s the same as a protocol owned airdrop. Instead of rewards going to staking wallets, they go to wallets with the parameters necessary (threshold we decide) to enable this short term incentive?
• Variables (thresholds) are:
  • Chose this feature for low volume/fee pair pools.
  • Trade size
  • Limit orders to start
  • Limit Order Time (variable) – until it gets filled, you can earn rewards (maybe, since timing is our thing (100D IL)
  • (short-term) Timing bursts:
    • 1. Everyday a small Amt for certain pools/pairs - (~2 weeks inspite of DeFi summer?)
    • 2. “Surprise” days with larger amts.
    • 3. Both, until V3, or
    • 4. Variable Time amounts depending on pool/pair
• Make small ‘trading’ LM pools for these trading BNT kickbacks
• In the most conservative case, let’s see you want to LIMIT trade on UMA, CRV, or BALANCER— we could reward orders on these while folks wait, using the rewards from the tiny LM pool?

DISSENSION / CONCERNS [Glenn, JM]

• My concern with doing this for a long period of time is that these folks might jump dump their rewards
• I’d like to see the new trade experience get rolled out before doing any sort of incentive. Trade volume is slowly growing over time without it.
  If we incentivize traders but still have a lackluster trading experience then there won’t be much reason to come back.
  But if we have the best in the industry trading experience and we use incentives to raise awareness, that’ll keep people coming back for more.
  It’s what rewards have done. LPs don’t leave Bancor very much because staking is so good on it.
• Has to stay in the pool. When you stake it burns protocol owned BNT.

LP PERSPECTIVE [Glenn]

• The folks that are eligible for rewards are those that have a BNT staked position that’s 100 days or older. Essentially, we incentivize LPs to stake and also trade on Bancor.
  Any rewards that we give to these folks will most likely be restaked back into the network since they must have a BNT stake position >= 100 days. You can think of it as exclusive Bancorian perk.
• The BNT that we kick back for each trade depends on the size of the order.
• We can potentially do something similar for limit orders for these individuals that have BNT staked position >= 100 days.

LONG TERM [Glenn, Ilyssa]

• We could potentially do something for TKN side LPs as well albeit at a lower rate of kicking back BNT for any trades that they do. The goal being that we want to convert these folks to be BNT holders so that they get better trade incentives.
• A structure can be set up so that if you have x amount of BNT for >= 100 days staked then you might get more rewards when trading. This will prevent folks from gaming the system by leaving a small amount of BNT stake forever so that they can get trading perks.
  • @Ilyssa: this ACTUALLY incentivizes LPs to trade more than they are currently.

[sylentz]

I would like to see something like FOX (ShapeShift): 5% of your trade volume is reimbursed in direct BNT at the end of the month. This directly gives you a further discount since one-leg swaps are ALL backed by BNT, so even if traders Aren’t Long BNT they can use that BNT for discounted trading further down the road. I doubt Limit orders are being used heavily since they are not guaranteed to be filled and need to be a huge amount. We just need regular traders to show up every day. We need something on the site to draw them to the site once a day and form a habit after 28 days. Currently we offer nothing unique to traders and the experience is 100% the same as Uni/Sushi/etc.

[eldude]

Seems like this should be in community chatroom not level 1

[ccc]

This seems to me like something a dev should chime in on before we get excited. Has one or more been consulted? If not, I think @mbr knows a few and could point them this way, if he didn’t know the answer himself.

[tenzent]

Key Take Away: Rebates must always be less than the revenue they generated or else this opens us up to exploitability and unprofitability. Either this or a Hard Cap on how much BNT can be rebated at a time for a campaign.

@eldude, you are correct I moved it.

Also figured this should probably be added here - It’s a No on Gas Rebates :

@mbr

Gas rebates might be problematic. It’s certainly possible, but may not be the answer we are looking for. A more sustainable approach, and priority for L1 is simplifying the contracts.

I Recommend everyone to read through the entirety of the Previous discussion as well so we don’t argue similar things.

Trader incentives discussion

I noticed there is only one topic discussing trading incentives about tiered fees so decided to make a more generic one here. This topic’s purpose is to provide a space for the community to convey and brainstorm ideas around rewards/marketing solutions to attract more trader volume to Bancor. A couple of ideas just to get the discussion starting: A trading competition to reward the highest trading volume wallets on Bancor in a certain time frame. Subsidising trader gas fees by awarding a cert…

Also, Previously we had an NFT Competition but it had little impact though it was very cheap to do (which is why we did it).

I Really Like Incentives based on Trading Volume : Giving a small % rebate back on trades that makes economic sense would be a great incentive so long as it’s marketed and pushed out well. This % Could also have a flat cap amount. Tweaking this slightly I think it should be based on the fees paid to Liquidity Providers, a lot of pools have different fee structures so we should take into account how much revenue they’ve generated for the protocol and then rebate a small amount of that back, this would make the most sense.

On a side-note, UMA does a something called KPI Options where people can get rewarded for certain metrics, We could build such an option in collaboration that would only pay out should traders meet certain criteria like Volume. This could also just be airdropped to high frequency traders, and would be a constant reminder in their wallet that if they were trading on Bancor they could cash in a bonus after a certain amount of time. We could also create a pool for such an option that high frequency traders could then buy these incentives from, basically like committing to trade a certain amount.

Also, @issabobissa If we want to do a % Inflation based on revenue thats fine, but another idea would be to have a set amount of BNT to be split proportionally between all people that trade during a certain amount of time. this is what Balancer does currently for their top pairs. They vote consecutively altering the bounty.

Here is a link to that also : BAL for Gas - Balancer V1

Balancer’s Volume - Incentives Initiated 7th of March

It’s worth noting that the following two months were huge months for all AMMs (our chart looks very similar) so they are not representative of this campaign.

@sylentz

I would like to see something like FOX (ShapeShift): 5% of your trade volume is reimbursed in direct BNT at the end of the month. This directly gives you a further discount since one-leg swaps are ALL backed by BNT, so even if traders Aren’t Long BNT they can use that BNT for discounted trading further down the road. I doubt Limit orders are being used heavily since they are not guaranteed to be filled and need to be a huge amount. We just need regular traders to show up every day. We need something on the site to draw them to the site once a day and form a habit after 28 days. Currently we offer nothing unique to traders and the experience is 100% the same as Uni/Sushi/etc.

This could be abused if there’s no cap on it, for example, I could trade a million dollars a million times between stables and rug the protocol. It’s important that the rebate is less than the revenue given to the protocol. edit : if the revenue is less than the rebate even if there’s a cap on it someone can create a thousand wallets and do the same thing.

@issabobissa

• Can we create a pool that has tiny single-sided LM? That’s the same as a protocol owned airdrop. Instead of rewards going to staking wallets, they go to wallets with the parameters necessary (threshold we decide) to enable this short term incentive?

Interesting Idea, so the LM Rewards or I guess Trade Mining Rewards are split proportionally between all the wallets that contributed volume.

[issabobissa]

Thanks. Sorry!

You should all know that I accidentally miss things on discourse —i am still navigating my way around. I apologize if this impedes discussion and development!

I see now there’s an older chatroom thread about trader incentives— not sure if anything was executed as a result of that discussion (the NFT giveaway?).

Some of this occurred on TG (did my best to summarize) and so I moved the proposal here first— especially given the topic relevancy and buzz.

While this proposal is “early stage,” —we have developed ideas, hence the reason I moved here. Happy to go along with due process, just giving my reasoning why

[mbr]

This is an important discussion, and an old one.

A big thank you to all of our key contributors who have been active in these discussions since the launch of v2.1, and I am glad that @issabobissa has rekindled it.

I am not going to reiterate the excellent points raised by others in this thread and elsewhere on Discourse and Discord. It is a complex topic, and the cost/benefit analysis is opaque at best.

Certainly, a trader incentives campaign is beneficial for mindshare, and absolutely we will need to act at some point. Whatever we decide to do, it is important that we appreciate the importance of timing and the specifics of the execution.

@MichalHerzyk and I have previously worked on a trader incentives document (unpublished), that we abandoned due to its premature nature. Remember that the Bancor product is still very much a work in progress; we have quite clearly created one of the best, if not the best experiences for LPs anywhere on any blockchain. However, the trader experience needs to be improved.

During a conversation with @MichalHerzyk I made the comparison to traditional coupon drops when new businesses are being established in a new area. Maybe a new restaurant is getting started, and they want to encourage people into their business to try the menu, hoping that it will create repeated business opportunities, with the confidence that their menu is better than their competitors. However, imagine doing the coupon drop before the restaurant is complete. Maybe the menu is not ready, or the dining experience is harmed by the noise of ongoing construction.

This is the situation we are in. Bancor’s current offer to traders is more of a “soft-opening”, while the LP product garners momentum. It works well enough to maintain the project; however, I am not convinced that we are satisfied with the quality of the trader experience that we can be confident that an incentives program will generate sustained traction yet. The lukewarm results of the Balancer campaign highlighted by @tenzent give testament to the importance of choosing your battles. We are presently underprepared.

This will change. The UI/UX for traders is being actively developed, and when implemented should create a unique value proposition for traders that they cannot access anywhere else. The time to deploy an incentives campaign to encourage traders into the platform is when our conviction is that Bancor is clearly the best place to trade. Then, our target demographic is motivated by the incentives initially but returns for the customer experience they enjoyed.

With all of that said, these threads are still useful. When the time comes to pull the trigger, it is immensely useful to have a reservoir of ideas and suggestions from which a truly excellent trader promotional campaign can be designed. Therefore, I would like to pivot the current conversation in a different direction.

Pretend that Bancor has completed its trader product. It is the best that can be imagined - there is literally no reason to trade anywhere else. Trading on Bancor makes you more attractive, more intelligent, it cures all of your physical and psychospiritual ailments, grants eternal life, and orders you a large pizza. It brings you to nirvana, helps you parallel park, beats up that bully from your childhood for you, and does your laundry while you play Minecraft.

Now, design the incentives campaign.
What should it look like?
How should it feel?
What form should the incentives take?
How much should we spend on it?
Is BNT involved or not?
How long should it last?

[issabobissa]

Mark, thanks for your comments and the historical discussion-- allow me to clarify a bit:

@mbr

however, I am not convinced that we are satisfied with the quality of the trader experience that we can be confident that an incentives program will generate sustained traction yet .

• The goal is not sustained traction, that is the long-term goal (along with a completed trader MVP).
• The short-term goal, as stated here, is to raise awareness and increase volume until we know more about V3—like a relief valve.

@mbr

The lukewarm results of the Balancer campaign highlighted by @tenzent give testament to the importance of choosing your battles. We are presently underprepared.

• Lukewarm >>> Cold. Right? Regardless of the trader product being finished or not (as you said below)— we have an opportunity (an obligation?) to take back some of the market share in a unique way.
• If there is dissenting opinion and data to support it, I am all for it. I suggested an idea, but am very open (as stated in my OG propsal)
• Waiting in this case doesn’t makes much sense-- unless the timelines for a completed trader ‘MVP’ are so far out such that we literally don’t want to advertise this feature or advocate for users to interact with it. So far, I haven’t heard good argument there.
• Finally, I disagree with the sentiment in general LOL-- our swap experience end-to-end isn’t that bad.

@mbr

Now, design the incentives campaign.
What should it look like?
How should it feel?
What form should the incentives take?
How much should we spend on it?
Is BNT involved or not?
How long should it last?

• If you don’t mind, can I answer your question with a question? Can you comment specifically on these suggestions, with respect to your template ^above?:

@issabobissa

• Can we create a pool that has tiny single-sided LM? That’s the same as a protocol owned airdrop. Instead of rewards going to staking wallets, they go to wallets with the parameters necessary (threshold we decide) to enable this short term incentive?
• Variables (thresholds) are:
• Chose this feature for low volume/fee pair pools.
• Trade size
• Limit orders to start
• Limit Order Time (variable) – until it gets filled, you can earn rewards (maybe, since timing is our thing (100D IL)
• (short-term) Timing bursts:
  • 1. Everyday a small Amt for certain pools/pairs - (~2 weeks inspite of DeFi summer?)
  • 2. “Surprise” days with larger amts.
  • 3. Both, until V3, or
  • 4. Variable Time amounts depending on pool/pair
• Make small ‘trading’ LM pools for these trading BNT kickbacks
• In the most conservative case, let’s see you want to LIMIT trade on UMA, CRV, or BALANCER— we could reward orders on these while folks wait, using the rewards from the tiny LM pool?

[mbr]

All valid points. My intention is not to be antagonistic - just to keep the conversation bounded with a view to keeping it productive.

@issabobissa

• Can we create a pool that has tiny single-sided LM? That’s the same as a protocol owned airdrop. Instead of rewards going to staking wallets, they go to wallets with the parameters necessary (threshold we decide) to enable this short term incentive?
• Variables (thresholds) are:
• Chose this feature for low volume/fee pair pools.
• Trade size
• Limit orders to start
• Limit Order Time (variable) – until it gets filled, you can earn rewards (maybe, since timing is our thing (100D IL)
• (short-term) Timing bursts:
• 1. Everyday a small Amt for certain pools/pairs - (~2 weeks inspite of DeFi summer?)
• 2. “Surprise” days with larger amts.
• 3. Both, until V3, or
• 4. Variable Time amounts depending on pool/pair
• Make small ‘trading’ LM pools for these trading BNT kickbacks
• In the most conservative case, let’s see you want to LIMIT trade on UMA, CRV, or BALANCER— we could reward orders on these while folks wait, using the rewards from the tiny LM pool?

With reference to these points:

The format is interesting, and mostly regarding a possible implementation. In general, we should focus on the intended outcomes before settling on a specific deployment. For example:

• Traders earn rewards according to their specific activities.
• Spot trading is eligible for a certain rewards schedule, and trading via the limit orders function is eligible for a different rewards schedule.
• The rewards mechanism takes trade size as an input to generate the amount of the reward as an output.
• For limit orders, the reward mechanism is executed only after the order is filled.
• The option to activate trading rewards for specific pools, or token pairs, is preferable to a protocol-wide deployment.
• Traders receive rewards in BNT.

After these details are fleshed out, and a rewards model is built, then we will be in a stronger position to decide on how the rewards should be distributed. As you have pointed out, yes, it is possible to enable effective single-sided LM, although this would use a different contract entirely. Calling it “liquidity mining” is unhelpful, and since we need a new contract anyway, best to call it something along the lines of “swap mining” or similar. As we will be writing the contract from scratch, we can build it to be as flexible as we need. The ability to target specific pools is a great idea.

In sum, the thinking is excellent. We just need to get into the weeds and decide on what a reasonable budget would be, and what data we should pay attention to vis-a-vis evaluating its success.

Thank you for taking the time to prepare this thread. I love and appreciate you @issabobissa

[tenzent]

@mbr

Pretend that Bancor has completed its trader product. It is the best that can be imagined - there is literally no reason to trade anywhere else. Trading on Bancor makes you more attractive, more intelligent, it cures all of your physical and psychospiritual ailments, grants eternal life, and orders you a large pizza. It brings you to nirvana, helps you parallel park, beats up that bully from your childhood for you, and does your laundry while you play Minecraft.

Now, design the incentives campaign.
What should it look like?
How should it feel?
What form should the incentives take?
How much should we spend on it?
Is BNT involved or not?
How long should it last?

Alright, so assuming these things let me try to stir us in a general direction. For the most part we have discussed monetary incentives, however if we are to assume that bancor is the BEST for traders we should perhaps turn our focus in a different direction.

There are three types of psychological incentives : Economic, Social, and Moral.

Economic

• From an economic standpoint the thing that makes the most sense is to simply give marginal inflationary rewards in whatever model that may be.
• Another interesting idea would be for the protocol to guarantee or insure (since we are technically also an insurance company as well) the price at which someone will receive an asset so long as it is still profitable for the network. That is to say the protocol guarantees the assets you will receive are exactly as printed out in front of you or it reimburses the slippage. This can also be done through integration with something like Archer as we’ve mentioned before in the TG and Discord chats (0 Slippage Trades using private miner pools).
• Maker/Taker Fees (Incentivize Limit Orders) and Funding Rates are also a major component of futures that help to incentivize continuous trading. Although this is much different since Bancor Trades are Spot not Derivatives. I am sure this concept could be engineered to work in some manner regarding to spot, we have some clever devs after all. (Cronje doesn’t understand contracts btw). A way my simple mind would think this could work in terms of Funding Rates for example would be using Chainlink Oracles to incentivize people to trade towards the market price, moving the work and profit of arbitragers to traders, who are more likely to be less efficient about it.

Sidenote - Moral and Social incentives would be a little bit harder without any economic impact, but the they can be used to counter balance the economic reward. If people are looking for pure economic rewards they will look for the maximum possible, but add a layer of prestige or moral good for the world/crypto ecosystem and people will be more willing to sacrifice some economic incentives in exchange for the other 2 aformentioned incentives.

Social

• Social incentives are much harder to apply efficiently but I’m sure something like a top traders in the network list that refreshed every week or so would get people excited. Apart from the weekly we could have a all time high-scores board denominating the best all time traders (Top Banclords?). If there’s an added financial incentive to being in the top, like a refund on all gas and or a prize pool for the top 10 or certain top % of traders it would certainly bring the competitive traders aboard. This could be bound by certain restrictions like a minimum amount of trading volume to qualify and the winners being picked based on % gains and having a minimum amount of trades in addition to the volume. This could be ran indefinitely with the DAO being able to adjust parameters around the amount of winners and size of the Pot.

• However, this would definitely require the ability to Short an asset to be integrated to really draw in competitive traders. I know UNN is working to incorporate this into our system but that might be far into the future.

Moral

• Since we live in the world of crypto the one moral incentive that I could see working would be something along the lines of : “Trade with Bancor and Support the world of DeFi”. Where we give a minute amount of rewards to traders and at the same time help fund something like a Pro-Bono Legal Defense Fund for DeFi. People would jump all over this, a lot of people are very passionate over crypto and I’m sure they would sacrifice whatever incentives other platforms give in order to support the ecosystem at large.

Anyway, those are some general Ideas that we could tweak or anyone can draw from to create their own concept. Try not to always think money though if it’s a game of who gives away the most nobody wins.

[issabobissa]

Thanks Mark , once again! Always kind, thoughtful and extremely helpful (where would we be without you?!)— I love and appreciate your input wholeheartedly! another reminder of how lucky we are to have you

@mbr

• Traders earn rewards according to their specific activities.

   + Agree.

• Spot trading is eligible for a certain rewards schedule, and trading via the limit orders function is eligible for a different rewards schedule.

   + Agree. This addition captures more of the market.

• The rewards mechanism takes trade size as an input to generate the amount of the reward as an output.

   + Agree. Other input parameters of interest can be added later. 

• For limit orders, the reward mechanism is executed only after the order is filled.

   ~ Maybe. i.e., if communities go for dual-sided swap mining-- could limit orders accumulate rewards AND/OR a rewards booster while waiting for their order to be filled on Bancor (or an integrated trading project)?
   ~ The trader mining rewards-- single-sided or dual, could be fixed (1-2X) or variable-- similar to our pools. 
   ~ Perhaps conditional that their wallet ALSO has Bancor staking positions open?
   ~ Optionally, a QUAD booster can be applied if their wallet has staking positions open in the corresponding pool / pair.
   ~ The booster can also be dependent on some other variable eventually
   + Also, all users are familiar with Boosters— from Bancor and curve. 

• The option to activate trading rewards for specific pools, or token pairs, is preferable to a protocol-wide deployment.

   + Agree. I can’t speak to technical architecture, but I imagine we have config flags + inputs per pool / token pair. 
   + We can add flags for trader mining rewards and emission amounts, depending on DAO and partnership configuration.

• Traders receive rewards in BNT.

   + Agree, to start! We should strongly encourage traders to cycle BNT back into the ecosystem, or strategically in partner protocols / tokens.
   ~ Maybe they can be enticed to LP but I like the idea of positive feedback trading-- integrated with another cool project / partnership we like as a community.

I love and appreciate you too @mbr

who doesn’t…? { insert custom Bancor emojis }

[issabobissa]

@mbr

In sum, the thinking is excellent. We just need to get into the weeds and decide on what a reasonable budget would be, and what data we should pay attention to vis-a-vis evaluating its success.

Also this, + Agree-- the budget (would love to hear any thoughts, all!) and evaluation metrics (KPIs…) should also be a topic of discussion, especially as we finalize an initial implementation of the trader {mining} incentives campaign [TMIC?, TIC? Lol.]

[issabobissa]

Thanks for the idea and details!

• This is cool, I didn’t know such a method existed. I think it’s a great idea for market trades-- in light of the points you mentioned.
• It genuinely encourages Bancor ecosystem recycling via trading, organically and steadily.
• Eventually, I see this working well with specificity cadence (higher% during certain times, on certain pools / pairs)

[glenn]

I will use this append to clarify my idea since the original post might have not done it much justice (sorry @issabobissa and thanks for getting this together).

Here are a few of my general criterias (these have probably been mentioned by others as well, thanks)

1. I also think it is better for us to wait until V3 and then do a large campaign on the trading side when that is launched. This would be in addition to what has been discussed by the community (ads, social media campaigns, rabbit hole, etc…)

2. Incentives should be restricted to those that are using Bancor directly.

3. Incentives should be restricted to those that are trading tokens on our whitelisted pools only. I don’t have a preference about picking winners and losers and think we should incentivize all trading regardless of the token (might be easier to implement as well).

4. We should not airdrop incentives directly to traders. They should collect in a “rewards” wallet and we should encourage via positive reinforcement to have these rewards restaked into the network.

Note: I adapted a portion of this from “@Justlinkit” which had a similar suggestion but added some of my ideas as well.

1. The program would essentially kick back BNT to traders that have a stake BNT position that is >= 100 days. We can require that a minimum amount of BNT is staked to prevent anyone from leaving behind a small BNT position to take advantage of this program.

• Tiers can be built so that if you have 100-1K BNT staked then you get a different reward percentage than someone that might have 1K-10K BNT staked in the system for the same time.
• We can also take into account the length of your BNT staked positions to factor into the rewards percentage that you will receive. If two traders have the same size BNT position but one of them has been staked for over a year then we might want to rewards him with a higher rewards percentage when trading.

Essentially, this encourages people to become BNT token holders to get access to the Bancorian perks that we provide. It also encourages folks to stake more BNT to unlock a higher reward percentage. Additionally, it encourages long term holding so that they can get an even higher reward percentage.

2. For the campaign itself, we can set aside a certain amount of BNT per week as others have suggested and since we have a dynamic supply token then we can mint an amount that the DAO approves for these incentives. Any left of over BNT in that week get rolled over into the next week. It probably makes sense to start small to evaluate how effective that campaign is and ramp up if we get massive trade volume that ends up exhausting the incentives by the first few days of the week.

3. Rewards per trade should be proportional to the size of trade and also factor in your reward percentage. We can cap the max amount of rewards that each trade receives to prevent gaming the system from folks that might make large trades between two assets in perpetuity if the rewards that they are getting outweigh the fees+gas cost that they are paying.

4. Rewards should collect in a separate rewards wallet that encourages restaking your rewards. If you withdraw your rewards then perhaps we demote you the base level (regardless of your BNT stake size and amount of time that you have stake) for some period of time (~1 or 2 weeks etc…).

We can adopt a similar program for those that only LP on the TKN side (no BNT positions) and have tier levels that correspond to some reward percentage that is less than the lowest tier for BNT LPs. Essentially, we want to encourage these folks to become BNT holders.

Edit #1: Added criteria item#4

[tenzent]

I think This Part is an insanely good addition to the utility of BNT :

@glenn

• The program would essentially kick back BNT to traders that have a stake BNT position that is >= 100 days. We can require that a minimum amount of BNT is staked to prevent anyone from leaving behind a small BNT position to take advantage of this program.

• Tiers can be built so that if you have 100-1K BNT staked then you get a different reward percentage than someone that might have 1K-10K BNT staked in the system for the same time.

• We can also take into account the length of your BNT staked positions to factor into the rewards percentage that you will receive. If two traders have the same size BNT position but one of them has been staked for over a year then we might want to rewards him with a higher rewards percentage when trading.

I feel however we could be a little bit more creative with how give out rewards rather than a Pot, I don’t have any concrete ideas but turning BNT Staking into a Trading Staking Token like FTT or WOO is HUGE. The only thing I’m worried about is how much overlap there is between LP-ers and Traders, obviously this would garner a new type of LP-ers or rather traders trying to get the best deal for their buck. anyway, great concept.

[Dave]

One thing that used to be very popular before free stock trades became more common; there used to be a small cash drop AND there were anywhere from 10 to 100 free trades for a window of time (say 10/month for 6 months or 100 over 6 months). The cash drop was to incentivize funding an account, and since we’re dealing with wallets, that’s not necessary. But I like the idea of have a given wallet get 30 free trades with the entire promotion expiring in a specific window of time. (this way there isn’t enough incentive for people to hop wallets indefinitely). This idea is to eliminate any barriers to making trades for enough trades to make it sticky. If you do something 20 times, chances are you will make it a habit, for example. If it’s too early to make this a big promotion prior to V3, then fine… but definitely would request that we make this part of any V3 promo… it’s relatively cheap and can be capped by time and number of trades at a wallet level and overall promotion level. e.g. overall promo level may settle on first 50,000 trades on V3 are free or until 30 days after launch. 30 allowed per wallet. as an example. (this is ETH Level 1 of course)

[issabobissa]

Ah @Glenn, apologies if something was left out— I was trying to consolidate and streamline a proposal, as my intent/goal may differ from those who have been in this discussion longer. Thank you for re-iterating though— I’ll need time to read through the details but so far I like the ideas— especially since it adds to the utility of BNT and think the tiered structure is interesting.

I’m a broken record, but for the sake of my original post, in the current state, i.e. interim of V2.1 and V3– we want to increase volume and awareness overall.

I think these are the questions left to answer for a short term, starter, interim campaign in order to boost that— please add on if I missed something:

• How much BNT is budgeted?
• Do we target certain pools / pairs? If yes, which ones?
• What is the time cadence for Market Mining campaigns and Limit Mining campaigns?
• What (simple) evaluation metrics do we use to determine its effectiveness?

I imagine implementing complexity, like we have all mentioned, later—maybe phase II of this campaign? As Mark mentioned, currently we don’t feel “happy” about our trading product. I worry some of the mechanics and incentives described are a bit complex to start with and thus, we won’t execute or analyze the results in time (acknowledging I have no idea, maybe this is really simple and I’m completely wrong lol)

The bottom line is there is risk in building a fully fleshed out, engineered structure in the current stage. From a protocol perspective, if dev resources outweigh rewards in the given time frame— it’s not worth pursuing yet (until post-V3 ) I’m glad you’ve included all the details here though, in case it’s something that we want to do/can be done as part of the plan and/or the future MVP!

Also, there are a lot of retail investors who have learned (as mentioned in Bancorians), in addition to the regular traders— I think we take grabs from them with both approaches. Quick airdrops, followed by a more complex strategy. My proposal was more of a quick-win “for now.”

TLDR: I think we can do both— have a complex structure, for example what @glenn and others have suggested, fully integrated with our trader MVP, etc post-V3.

BUT for now, I’d like to get a proposal together for a short term trader mining interim campaign. And we can keep brainstorming/developing on the above ideas in the meantime.

[issabobissa]

Thanks for sharing this— personally i love it for this proposal.

I think we should do something very similar to it pre-V3 and post-V3— it’s the exact simplicity / stickiness / awareness combo I’m imagining.

We can inform traders of the incentive campaign details and ask for feedback on the delta between v2.1 and v3 (maybe give more BNT for that feedback)— it also keeps them part of the conversation, contributing to the product, and engaged in community (thinking massive advertisement)

[glenn]

@issabobissa

Ah @Glenn, apologies if something was left out— I was trying to consolidate and streamline a proposal, as my intent/goal may differ from those who have been in this discussion longer.

No worries, even my ideas were not solidified completely. Also, given the medium (chat) your notes provide a good summary.

@issabobissa

I’m a broken record, but for the sake of my original post, in the current state , i.e. interim of V2.1 and V3– we want to increase volume and awareness overall.

My concern is that anything that requires development work at the moment is not going to get done because all the focus is on V3. I don’t think we want to change the current direction because that’s going to further delay the release of V3 which I think is more important. We should definitely have a trader incentives action plan regardless so that we are ready when the time is right.

@issabobissa

I think these are the questions left to answer for a short term, starter, interim campaign in order to boost that

Yes, that looks correct to me in addition to some of the questions raised by Mark previously.

@issabobissa

BUT for now, I’d like to get a proposal together for a short term trader mining interim campaign . And we can keep brainstorming/developing on the above ideas in the meantime.

I think getting feedback now is good because we can solidify a few proposals around trader incentives. What I had suggested (which I am going to term the Bancorian membership perk going forward) is one of the many venues that we can pursue. There is nothing that would stop us from implementing the Bancorian membership perk (if the Bancor DAO wants such a reward mechanism in place) in addition to a general trader incentive for everyone (not exclusive to BNT holders).

[Jefe-fintechv1]

Great thread! As a fintech vet, and former registered principal with FINRA I provide my thoughts below as friendly constructive criticism as well as propose next steps.

@issabobissa

I am proposing a short term trade incentive campaign by kicking back BNT to any person that trades directly on our DEX.

The use of “kicking back” or “kick back” is an immediate red flag for regulators that may be poking around. I recommend we follow what’s commonplace in the world of TradFi since doing so will keep us in the clear: bonus deposit for making X trades within Y timeframe, reduced trading fee tiers based on # of trades or volume (value), etc. This reprimand goes for you too @glenn and anyone else I missed who used the phrase “kick back”

@issabobissa

rando rando: would bancor ever do an airdrop? Might be a good idea to promote traders to the platform after v3 drops. Something like wallets who made > 5 transactions get an airdrop

This is exactly the sort of incentive program that would be OK from a compliance perspective. It is no different than “Get $100 deposited into your account when you complete 30 trades, etc.” Other than this use, I’d need to be convinced why airdropping for the sake of airdropping would cause a long-term benefit.

@issabobissa

We can agree from the data that LPs & Traders aren’t utilizing the feedback system as exactly we’d like them to— we aren’t getting the traders, for whatever reasons.

From my perspective, the reason is that we have not focused on traders, the trading interface, etc. at all to date. If traders are who we wish to attract and keep as protocol users, then traders are who we should speak with to design an interface that suits their needs.

@sylentz

I would like to see something like FOX (ShapeShift): 5% of your trade volume is reimbursed in direct BNT at the end of the month.

This trading fee rebate is also acceptable: achieve a volume hurdle and your fees reduce/you receive a deposit/reward.

@tenzent

This could be abused if there’s no cap on it, for example, I could trade a million dollars a million times between stables and rug the protocol. It’s important that the rebate is less than the revenue given to the protocol . edit : if the revenue is less than the rebate even if there’s a cap on it someone can create a thousand wallets and do the same thing.

We would need to resolve this. Typically, in tradefi there would be very specific terms and conditions that would prevent such gaming of the system. Given the pseudonymous nature of crypto it will more difficult to envision such a framework.

@sylentz

We just need regular traders to show up every day.

I couldn’t agree any more with this statement even if I said it myself.

@ccc

This seems to me like something a dev should chime in on before we get excited. Has one or more been consulted?

I would actually say that traders should be consulted first to compile must have, nice to have and wish list features to consider for v3 and beyond, and then to approach the devs.

@tenzent

Also figured this should probably be added here - It’s a No on Gas Rebates :

Yes, I unsuccessfully lobbied for this as well. L2 solutions, assuming they are virtually gasless like Polygon, should resolve this issue moving forward.

@tenzent

Also, Previously we had an NFT Competition but it had little impact though it was very cheap to do (which is why we did it).

An NFT complies with the concept of an account opening deposit discussed earlier for completing some activity requirement (e.g. X trades, X volume, etc.)

@tenzent

Giving a small % rebate back on trades that makes economic sense would be a great incentive so long as it’s marketed and pushed out well.

I won’t speak to the technical aspects of this idea, but in tradefi the more volume (e.g. shares, options contracts, etc.) the lower the trading commission. Perhaps an activity-based (e.g. # of trades, volume in USD or ETH or BNT, etc.) tiered trading fee schedule would be more appropriate. As @tenzent points out, UMA already does something similar.

@tenzent

It’s worth noting that the following two months were huge months for all AMMs (our chart looks very similar) so they are not representative of this campaign.

Exactly the problem, we launched the trader incentives coincided with a massive altcoin rally so it is difficult to assess its true effectiveness.

@mbr

I am not convinced that we are satisfied with the quality of the trader experience that we can be confident that an incentives program will generate sustained traction yet .

@mbr

The UI/UX for traders is being actively developed, and when implemented should create a unique value proposition for traders that they cannot access anywhere else.

Not to be a stick in the mud, but was a diverse group of traders consulted with to determine specific details about what they need, or did we decide what we think they need that would make the best experience for traders on Bancor?

@mbr

Pretend that Bancor has completed its trader product. It is the best that can be imagined - there is literally no reason to trade anywhere else.

@issabobissa

Finally, I disagree with the sentiment in general LOL-- our swap experience end-to-end isn’t that bad.

Isn’t that bad is not good enough.

@Dave

One thing that used to be very popular before free stock trades became more common; there used to be a small cash drop AND there were anywhere from 10 to 100 free trades for a window of time (say 10/month for 6 months or 100 over 6 months). The cash drop was to incentivize funding an account, and since we’re dealing with wallets, that’s not necessary.

Thank goodness someone else remembers the world before commissionless stock trading! This is what I was referring to earlier, and this is how we should be thinking. Take what is known to work from tradfi and apply it here until we iterate a new generation of trading incentive programs unique to crypto.

@glenn

My concern is that anything that requires development work at the moment is not going to get done because all the focus is on V3. I don’t think we want to change the current direction because that’s going to further delay the release of V3 which I think is more important.

I agree completely. Get v3 shipped first, and build a massive marketing effort, even an event, around its launch.

@glenn

We should definitely have a trader incentives action plan regardless so that we are ready when the time is right.

If an activity-based bonus is possible, and light on dev resources, then this would be the low hanging fruit to focus on. From this (my) laymen’s perspective:

• determining the bonus in terms of BNT to mint and distribute should be a DAO decision and not require any dev resources
• running reports to determine eligible wallets should be something we could do without the devs
• making a deposit (via an airdrop) should also be very light on dev resources

However, I’m still a blockchain tech novice so excuse my naiveté.

My point is that we should be able to enact a compelling trader incentive program now that utilizes little to no dev resources, and while dev resources remain focused on v3 we should thoroughly flesh out all of the sexy but more dev resource intensive ideas such as swap mining, trading token staking, etc.

As next steps, I propose that we:

1. Decide on the mechanics of an interim trading incentive program, of which I support an “account opening bonus” for any trader (wallet) that completes X trades (or generates Y volume) within Z amount of time.
2. Create the reports to track trading activity
3. Set the program’s budget cap
4. Line up promotional efforts through social media, podcast interviews, jumping on the community calls of all WL’d TKNs, etc.
5. Light this candle: LFG!