Anti Wash Trading Rules

This post is to discuss the “anti wash trading” rules when trading mining.

On the one hand, the rules shall discourage the trader wash trading for trading mining. On the other hand, the rules shall balance between recall and precision.

Here, I propose two basic rules:

  1. If two trades have the same volume and execute simultaneously, we should exclude the trades from the trading mining formula.

  2. To discourage the large volume at the end of the epoch, we shall introduce a time-weight factor to the trading fee. The weight of the trading fee will decrease linearly, and at the end of the epoch, it will become 0.5.
    EffectiveTradingFee = (1- 0.5 * (ElapsedTime/TotalEpochTime)) * TradingFee

I suggest the community give more comments and rules.

tc, a huge fan of your math here from the AMM whitepaper!

I also asked LJ in tg group to make the fee a time weighted component before wash trading problem surfaced. Now it only become more of a necessity to protect small traders from whales dilution in the last day last hour.

I like your linear 0.5x formula, which is simple for all to understand and effective. But I have one suggestion to make:

‘simultaneously’ - while it’s literal meaning is clear, more technical definition is needed so everyone can know precisely what the rule is. It should be equivalent to what you put in code, be it done in one tx (Alice and Bob’s tx as in my proposal), or two separate tx but within same block, or two separate tx within a fixed time window defined as within how many blocks apart.

I am generally in agreement with both rules.

However, I would like to stress one thing, if bot’s scores are not excluded from epoch 0, many real traders would leave MCDEX. For those there’s no next epoch. I hope you and your team will do the right thing to restore faith in the community, so that we can see each other in the coming epoch after epoch knowing the game is fair to all.

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It’s useless for rule #2. Rule #2 will make ppl mining billions trading volume in the first hour of the epoch, instead of the last hour crazy. That’s artificial manipulation. Just kick out the wash traders, and let usual random fluctuations go on the market. Standard fluctuation is very common. One hour spike and two weeks idle, that’s not a good system. We need organic growth, organic fluctuations.

We just need to exclude those wash trading, let them go away. They are useless for the system. There is no shortcut for personal success, nor for the project success. Why not do real operation, real trading, the success takes time. Actually, Bob lost a lot of money with his 10X leverage trading and get liquidated. There is never a shortcut in exist.

Integrity makes credit!

both rules are a good start, but please bear in mind that wash trading can still escape such gaps. there should be discretionary judgement made when such activity happen and perhaps as a DAO, there should be democratic consensus if certain bad actors should excluded from rewards allocated even if it does pad the volume metrics nicely.

Per the administrator Dcryptorose’s suggestion at tg group, I copy the message here:

Observation: More than 15,000 ppl in the group, but only 23 active users, trading ~$80M ETH-BUSD in the last 24 hours, and Bob traded more than 90% of the ETH volume. Interesting.

The real users can’t get good reward/profit so they don’t jump in? Is it due to some whale/wash trader take more than 80% of rewards?

Why not let the real users earn good money and attract more real users onboard to the platform? Let’s do user and volume organic growth.

The present situation is making “fake” volume to attract users, that’s not the valid logic. Users won’t jump in because of large volume, but for profit.

That’s why we are discussing the new rules here. any constructive suggestion? Talk like that is easy. Please provide suggestions that can be implemented.

If you don’t listen to the community and do the so simple action to setup the vote, why should I provide more suggestion?

BTW TC, you as a Chief Scientist/Dev, let’s talk the tech, what’s your response to my comment that the rule #2 is useless?

Simply implement an option to let us unstake, we will leave right away and never come back. How much rewards your want to give to the bot will no longer be our business.

So if rule 2 is useless, your suggesstion is to delete rule 2 then? or any suggestion to modify it?

Jean, you guys banned me from tg chat and censored all my comments, after I told LJ, you guys not excluding wash trading bot score, no one now would join trade mining. It’s a fact, maybe it’s not a fact you like to hear, that doesn’t make it attack. You are free to your own opinion, just don’t force it on us.

When I first talked about wash trading in mid epoch 0 (date of my proposal), one of LJ first responses in tg was like “but he (bot) staked”. For god sake, we all traders have staked! Now real traders staked capital is doing nothing compared to the bot’s, because of the cheating allowed in epoch 0. If you have the basic decency, just let us unstake. I and many traders from epoch 0 will leave you for good. And you don’t need to act like we are your real problems anymore.

No if, you need to answer the question straight. BTW, actually I don’t need the spokeswoman answer the question, pls let your scientist do the job.

Nothing is perfect. Born for only one month or so, V3 has made some milestones and on the track.

Pushing again and again is meaningless IMO.

It’s not for the perfect at present, but for the team’s attitude, work style, and a real discussions with the community. The team doesn’t really answer the community’s technique/mathematic questions, not to say governance questions. You won’t find any other serious projects with this kind of forum work. I did think this project as a serious project, but that’s my over expectation.

There is no maths in your question. No need to let Tc take that. Regarding your question about huge volume in the first hours, that’s not true. Because in the beginning of the epoch, the cost of doing trades and rewards is VERY unpredictable. Doing that is taking a huge risk. I don’t think someone with proper sense of risk will do that. And again, that’s the best solution that we come out for now, if any better ideas for rules, for sure welcome to propose.

And one more thing, I need to emphasize that -

Bot trading is absolutely legit.

Many trading firms are using bots to trade, to arbitrage using bots instead of UI. This is absolutely legit. Actually, we encourage bot trading to do arbitrages to remove LP risks exposure.

Bot trading != wash trading.

We definitely anti wash trading, but not anti bot trading.

Really need to clarify this since i saw some anti bot trading talks above.

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these rules are useless, you realise someone can open two opposite positions lets say 50 btc and 49.9. btc. My question to the team, will you include them or not?

Wash trading is also a kind of trading. Why should we stop that ! Wash trading continues to contribute fee to Dao. It is good for the protocal. The trading mining will finish in the end. The right thinking is to find a way of increasing organic trading volume not just stop wash trading