Transaction mining is a rewards program that aims to incentivize trading by returning a portion of trading fees to traders.

Motivation

• Reward early traders with PERP to attract more traders to the system

• Distribute PERP into the hands of users

• Create a positive feedback loop for traders and stakers

• Prevent wash trading

Proposal

• Providing rebates for trading fees.

• The Transaction Mining program will test run for 4 weeks after launch and will be evaluated further at that point.

• Rewards will be paid in PERP, paid from the reward pool and vested for some period.

Reward Calculation Time

At the end of every week (Sun 00:00 UTC)

Off-Chain Process

1. Perpetual Protocol aggregates all the trading fees paid by each trader in the given week.

2. Each trader is rewarded a USD-denominated value of PERP based on a percentage of their aggregated trading fees.

   1. The 1-week TWAP USD price for PERP will be used to calculate the reward amount.

3. The rewarded PERP tokens are capped per week. Once the rewarded PERP > the cap, the rewarded PERPs will be proportionally distributed to stakers.

4. The PERP rewards will be locked on-chain for some period. The locked rewards would not be stakable in the Staking Pool.

5. Perpetual Protocol pays each staker by submitting one or more on-chain transactions.

6. Perpetual Protocol will publish weekly trading stats.

Pros and Cons

• Pros

  • Traders earning PERP → more fees → more Insurance Fund / more yield for stakers → more demand for PERP → more exposure for the protocol → traders earning PERP

  • Perpetual Protocol is giving taker rebates, encouraging traders to trade, and it also disincentivizes wash activity because of the USD-denominated value of PERP and the locked-up period

  • Off-chain process that’s easy to update

• Cons

  • Need a reliable TWAP price before it launches

Parameters Updatable by Governance

• The total amount of PERP to be used as transaction mining rewards

• The reward vesting (lockup) period

• The percentage of trading fees to be granted as PERP rewards