HP022 - Increase Maker Rewards

Increase Maker Rewards

This proposal seeks to:

  • Increase Maker rewards from 4,000,000 (0.4%) to 5,000,000 (0.5%) per month
  • Reduce Trading Volume reward from 1,500,000 (0.15%) to 700,000 (0.07%)
  • Reduce Open Interest reward from 500,000 (0.05) to 300,000 (0.03)

If this proposal passes, the new rewards will be:

  • 5,000,000 /mo (0.5%) for Makers
  • 700,000 /mo (0.07%) for Trading Volume
  • 300,000 /mo (0.03%) for Open Interest

The overall emissions spent on rewards will remain the same: 6,000,000/mo (0.6%)

Motivation

Makers on Hubble Exchange’s V1 are paying funding payments majority of the time. This can be as high as 43.8% on their impermanent position, negatively impacting their PnL.

Liquidity has also become more expensive in a QT environment and demands greater rewards for retention.

This proposal aims to adjust the Makers component of the rewards, previously 0.4%/mo, to 0.5%/mo.

This iteration of the rewards intends to achieve fairer compensation for Makers, retaining their liquidity in the AVAX-PERP vAMM.

  • For
  • Against
  • Neither

0 voters

2 Likes

I think this should be weighed very carefully.
Though, I am a maker and it would be beneficial for me, I still think some type of economic thought should be given to this.

I would prefer some stats if possible on how much funding are makers paying out. Some stats like the below would help -

  1. The lowest Margin Ratio reached for makers who are in position for significant time (2 or more moths, in high volitility.)
  2. Average margin ratios of makers if they are in for a significant time.
  3. Overall funding paid by makers vs takers.
  4. Average of Loss/Hubble earned by makers.

With all of this, I am not sure if Open Interest plays any advantageous role in hubble. I would argue that open interest is an imprtant term for traders, but I dont think it plays any sort of role in attracting liquidity nor traders, Hubble tokens for Open interest can be used else where.

Open for discussion. These are my thoughts.

2 Likes

Why do you think Open Interest is not important? By incentivizing it, in the long run, if the funding fee goes against the trader, they would still be willing to keep that position active so you’re, essentially, as a protocol trading tokens to people keeping their positions active even if it’s not advantageous to them. Don’t makers usually in the long run become profitable from funding fees? So, it’s in their interest to have high Open Interest. Of course, at best it would be to check out the numbers so far as you mentioned.