Proposal 42: Mining Program Epoch 1 - 6

Motivation

The Mining program Epoch 0 is ongoing. MCDEX achieved a $170m TVL and $100m daily volume.

I suggest extending the program for another six epochs (12 weeks) after epoch 0 ends.

Aim:

  1. Onboard more users
  2. Onboard marketmakers (aggregators)
  3. Increase Liquidity pool and volume

Changes

We shall make some minor changes to the term of epoch 0 as follow:

Fee Factor

Because we are planning to introduce more perpetual contracts and different contracts may have different fee settings, we shall use the fee paid to the DAO, instead of the total fee, in the trading mining formula. Thus, no matter what the fee rate of the perceptual is, we only take the fee paid to the DAO into account when calculating the fee score. The fee paid to the DAO is a fair factor to measure the contribution of the trader to the Ecos-system.

The fee paid to the DAO contains:

  • Treasury fee (0.015% on all the networks)
  • Operator fee if MCDEX DAO is the operator of the pool (variable, 0.025% on BSC)

If the perceptual has a fee rebate setting, the rebate should be excluded from the fee score.

MCB Re-stake

Currently, traders stake MCB tokens for 100-day to participate in the trading mining program. The lock-time decreases day by day, decreasing the staking score of the trader. We shall allow the trader to re-stake their MCB to maintain their staking score. After re-staking, the lock-time will be reset to 100-day.

Mining Program

Reward Schedule

I suggest allocate the epochs some MCB as the mining rewards and decrease the rewards linearly. The rewards should be separated into two parts: 10% for liquidity mining and 90% for trading mining.

Epoch Time Total Rewards Liquidity Mining Trading Mining
1 Oct 18 ~ Oct 31 80k MCB 8k MCB 72k MCB
2 Nov 1 ~ Nov 14 70k MCB 7k MCB 63k MCB
3 Nov 15 ~ Nov 28 60k MCB 6k MCB 54k MCB
4 Nov 29 ~ Dec 12 50k MCB 5k MCB 45k MCB
5 Dec 13 ~ Dec 26 40k MCB 4k MCB 36k MCB
6 Dec 27 ~ Jan 9 30k MCB 3k MCB 27k MCB

The MCDEX DAO can change the schedule via governance if necessary.

Liquidity Mining

MCB rewards shall distribute to the LPs who add liquidity to the MCDEX AMM. The foundation shall choose the proper pools for the mining program and allocate the rewards among the pools.

Trading Mining

MCB will be distributed to traders based on a formula that rewards a combination of fees paid, open interest, and staking score. MCB will be distributed on a 14-day epoch basis and is not subject to any vesting or lockups. The number of MCB of each epoch is determined by MCDEX DAO governance.

The function below is used to compute how much MCB is awarded to each trader during each epoch:

w=f^{\alpha } \cdot d^{\beta} \cdot s^{\gamma}
r=R\cdot \frac{w}{\sum_{n}{w_{n}}}
Term Definition
r Reward for a specific trader.
R Total reward to be split between all traders in the pool for the epoch.
w Individual trader score.
f Total fees paid by a trader to the MCDEX DAO in this epoch.
d A trader’s average open interest (measured every minute) across all selected markets in this epoch.
s A traders’ average MCB staking score (measured every minute) in this epoch.
α A constant that determines the weight of fees. The initial value is α= 0.7.
β A constant that determines the weight of open interest. The initial value is β=0.3.
γ A constant that determines the weight of the staking score. The initial value is γ=0.3.

MCB Staking Score

A trader can obtain Staking Score by locking MCB in the staking smart contract. The lock time of staking is 100 days.

The Staking Score (s) is defined as follows:

s=n\cdot t
Term Definition
n The number of staked MCB.
t The remaining lock time in days.

Update of Lock Time

If the trader stakes multi-times, the remaining lock time is the weighted average value of each staking.

Supposing a trader has n staked MCB and the remaining lock time is t, if he stakes another m MCB, the remaining lock time t is updated as follows:

t=\frac{t\cdot n+T\cdot m}{n+m}

The initial value of T is 100 days, which can be changed by MCDEX DAO governance.

The trader can reset the lock-time to T at any time.

Multi-chain

Since MCDEX has a multi-chain strategy, the mining program shall be deployed to multi-chain either. The foundation shall add chains to the program step by step during the epochs.

The Trader Staking Scores shall be shared across the chains. Thus, the staking score shall be the sum of the scores on the chains.

s = \sum_{n}{s_{n}}

I suggest the community discuss this proposal.

Note: I will modify the proposal draft according to the feedback of the community before voting.


Notice from Admin

MCB is deployed to Ethereum and BSC, to make more ppl can participate in the governance, we will leverage snapshot.org to vote. Unfortunately, Snapshot removed Arbitrum support recently. Holders on Arbitrum have no voting power. In order to vote on the proposal, MCB holders on Arbitrum have to transfer their MCB to BSC via Anyswap.io before the snapshot is created (Oct 14th).

The ppl below will have vote power:

  • Etherum:
    • MCB holders
    • Uniswap v2 LP
    • Uniswap v3 LP
  • BSC
    • MCB holders
    • Traders who staked MCB

Admin Update:

  • Please vote on Snapshot
  • This proposal is approved.
3 Likes

I agree with the proposal - seems sensible given the number of contracts will be increasing over time with different fee rates.

Ni Hao Jie.

For the topic of multichain - and bearing in mind that MCB is currently spread across 3 chains now, can MCB Staking Score be shared across chains, especially when Mining Program goes cross-chain (arbitrum) ?

The Staking Score shall be shared across chains.

1 Like

support,This is the best decision I have ever seen

wow, good to see you here again! It’s been a while.

1 Like

If there already 10% set aside for liquidity mining?
If there isn’t then i dont see the need to incentive liquidity side because as trading vol increases, liquidty side will get high apr.
There will be short run volatility as an AMM which users will need to accept as part of the risk.
Current rates of 70% busd, 10% btc, and 30% eth is more than decent.

5% (5000MCB) is used in current epoch 0 liquidity mining. You’re right that with the increase of the volume, the APY will be high. However, we’d like to bootstrap more pools, so we suggest increasing the liquidity mining side a little.

makes sense for new pools. :+1:

Could you pleas elaborate how it’s calculated across chains? Will each part of the trader score be combined across chains and then calculate the score, or will the scores be calculated separately and then combined across chains?

The Score should be equal to the sum of the staking scores of all the chains. As a result, the trader’s score should be the same as he stakes on one chain.

1 Like

May I propose to consider allocation to be proportioned of the Average 24H Volume / Liquidity Ratio ?

The thinking is that we want to incentivize market makers to contribute towards pools that have the highest volumes so we can offer traders the lowest slippages and tightest spreads around the vAMM.

estimates BUSD ETH BTCB
volume (24) $89,910,000.00 $2,525,171.00 $16,800,000.00
liqudity $64,230,000.00 $78,203,181.00 $15,905,257.00
ratio 1.400 0.032 1.056
% 56% 1% 42%

Currently the ETH pool is overly incentivized. Unless we are proposing to add new pairs under ETH pools in the near future, I still suspect BUSD-margin pairs to be the popular choice.

Can we propose therefore to optimize allocation, something like:

BUSD ETH BTCB
allocation 60% 10% 30%

Of course, more visibility in the pairs that will be added to respective pools would be good, but hope this will help drive additional consideration.

1 Like

Thanks for the suggestion! I agree. Due to some tech issues, we cannot change the liquidity mining dynamically. How about this: we change the reward distribution weekly. It should be changed according to the volume / Liquidity. I will give detailed rules about the change later.

2 Likes

Oh! It doesn’t have to be dynamic. I was thinking every epoch will even suffice! Thanks for listening!

1 Like

The proposal has passed. In epoch 1, we minted 80,000 MCB. The transaction is: