Transaction Mining Proposal

Also known as transaction mining.

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

Perpetual Protocol transaction mining is scheduled to begin some time after mainnet launch. The following information is for reference purposes and may change as the proposal develops.

Motivation

  • Reward early traders with part of the inflation rewards to attract more traders to the system

  • Distribute PERPs into the hands of users

  • Create a positive feedback loop for traders and stakers

  • Prevent wash trading

Proposal

  • Providing transaction mining rebates for 1) trading fees 2) funding payment.

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

  • 50% of the inflationary rewards will be used for this Transaction Mining program.

See the original proposal (referred to as liquidity mining) on our governance forum: https://gov.perp.fi/t/wip-liquidity-mining-rewards/17

Reward Calculation Time

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

Off-Chain Process

  1. Perpetual Protocol aggregates all the trading fees and funding payment paid by each network participants of the given week.

  2. Each network participant is rewarded USD-denominated value of PERP based on 100% of their aggregated trading fees and 50% of their aggregated funding payments. The USD price of PERP is TWAP of that week.

  3. The rewarded PERP tokens are capped at 50% of the inflation rewards for that week. Once the rewarded PERPs > the cap, the rewarded PERPs will be proportionally distributed to stakers.

  4. 80% of the paid PERPs are locked on-chain for one year, and the remaining 20% is claimable right away. The locked rewards would not be staked in the Staking Reserve.

  5. Perpetual Protocol pays each staker by submitting an on-chain (or several) transaction(s).

  6. Perpetual Protocol will publish weekly trading stats to IPFS for anyone who wants to verify it.

Example

Alice pays $50 of trading fees to open a long position on Monday and also pays $20 of funding to shorts on the same day. At the end of the week, she would receive $60 of PERP to compensate her fees. She could claim $12 of PERP right away, and the other $48 of PERP one year after.

Funding Payment Reimbursement

  • 50% of a trader's funding payments would be sent to the trader;

  • 50% of the funding payments would be sent to the Insurance Fund instead of the receivers of the funding payment. This is to prevent wash trading.

Pros and Cons

  • Pros

    • Traders earning PERPs → more fees → more Insurance Fund / more yield for stakers → more demand of PERPs → more traders earning PERPs

    • Perpetual Protocol is giving 100% taker rebates, and so it’s “free” for traders to trade, but it also disincentivizes wash activity because of the USD-denominated value of PERP and one-year locked-up

    • Off-chain process that’s easy to update

  • Cons

    • Need a reliable TWAP price before it launches

Parameters Updatable by Governance

  • The ratio of liquidity mining

    • 50% of the total inflation rewards

  • The ratio of 1-year reward lockup

    • 80% will be locked-up for one year

    • 20% will be claimable after the epoch

  • The ratio of PERP rewards

    • 100% of trading fees

    • 50% of the funding payment