The Trading Rewards programme has been operating for 4 weeks and has been a great way to reward active traders, attract new users for the protocol, and distribute DVF to over 3500 community members.A few large accounts are still trying to farm the programme at the expense of real platform users and DVF holders. You could see this in action yesterday when trading volume jumped to $20m from an average of $6m the previous few days (in what is the quietest trading week of the year across exchanges).Therefore we have taken the decision to reduce the reward emission by 80% for the current period. Rewards will then increase each week in step with our goal of increasing the number of active users on the platform, for which we have a number of plans.The new rewards pools will be as follows:
IMPORTANT: From 12.01pm on December 20, the following pairs will not qualify for trading rewards:
There has been some unusual activity on these pairs which goes against the ethos of the trading programme. Our goal is to ensure that traders are rewarded for real trading, and only genuinely committed users receive our token incentives.
We’ll also reserve the right to ‘blocklist’ any addresses from today that we feel are trading unprofitably at high scales to earn DVF.
From today, you can earn DVF tokens simply by trading on DeversiFi. In other words, you’ll be rewarded for your activity on our platform. These tokens will give you a piece of DeversiFi: they’ll allow you to vote on all the crucial issues around the governance and direction of our protocol, and even suggest your own changes.
In parallel, you can swap tokens in one of our six brand-new AMM liquidity pools. This means you’ll benefit from instant, permissionless transactions: the liquidity is pre-filled, so you won’t need a partner on the other side of the deal. As time goes on, these pools will be filled by our community, meaning you’ll have the chance to earn even more rewards.
As they evolve, the two strands of this programme will forge a symbiotic relationship. The traders will provide greater rewards for the liquidity providers, who will in turn create an ideal environment for trading. The faster this cycle spins, the quicker our AMM pools will grow, and the sooner we’ll achieve our goal of making DeFi accessible to everyone.
In this post, we’ll explain the reasons for phasing our project in more detail, and outline what the programme will consist of. As a TL;DR, this is what you can expect to find out:
This initiative will consist of three specific phases.
Phase 1: Trading rewards and trade-only AMMs. When you trade on DeversiFi, you will earn a share of your overall trading fees back as a DVF gift. That’s 25,000 DVF (at today’s valuation that’s $402,250) that you could earn a share of every week.
At the same time you’ll be able to use the first six AMM markets in ‘trade-only mode’. The liquidity pools will be whitelisted, meaning that only DeversiFi Labs will provide liquidity at first (although we will claim no rewards for this).
The markets will be as follows:
Phase 2: Initial upgrade. We will make a number of improvements to the initial trading pools. These include switching on market-routing, which will enable other markets to tap into the trading pools: this will allow us to create a mix of traditional, order book-based trading and AMMs (more on this below).
Phase 3: Fully live. We’ll switch off the whitelist and enable anyone to participate in providing liquidity for the trading pools. We’ll also start liquidity mining, which will trigger the second part of our rewards programme.
You’ll be able to provide liquidity to our trading pools and receive APY interest yields as well as DVF tokens as reward for doing so. We’re hoping to roll out phase 3 within the next few months.
What we’re building: a unique hybrid of Layer 1 and Layer 2
Ethereum is built on two separate layers: layer 1, the core blockchain architecture, and layer 2, a transactional network that sits on top of this foundation. Most AMM platforms are built purely on layer 1, but ours will be split across both layers. Layer 1 will be used to create the AMM tokens while layer 2 will provide the management of daily trading activity.
We feel this offers a great balance to traders, combining the key advantages of both tiers.
But perhaps the biggest benefit of all is the flexibility. Our new model enables us to combine traditional order-book trading with AMMs: in other words, we can plug order-book markets into our new pools, so users can get the best price possible, whichever route it comes from.
If the price determined via individual order-book sellers is lower than that provided by the AMM algorithm, our routing network will connect you with that price instantly. This combination of old and new-school trading is unprecedented in the AMM world.
Over time, we hope to build on this unique model by replicating existing layer 1 liquidity pools on layer 2. So we could work with more advanced pools like those pioneered by Curve, or Balancer V2, and use the structure we have created to add this flexibility.
Why we’re initially launching AMMs in trade-only mode
As you can imagine, our AMMs have required a huge amount of technical design and engineering. We’ve been challenged to combine brand-new technology for layer 2 with core Ethereum Solidity smart-contracts (which will enforce the layer 1 security).
We’ve had to build highly complex features along the way. We’ve created a matching engine to compare AMM and order-book prices, and we’ve implemented advanced logic that prevents the layer 2 operator from ever cheating, maintaining complete trustlessness.
We’ve already gone through loads of rounds of reviews and audits, and we’ve carried out extensive testing via Goerli and Ropsten, two specialist Ethereum test networks. However we want to keep testing and tweaking, to deal with the initial volume of activity we anticipate.
We’re going to conduct further mainnet testing, with additional audits of the layer 1 smart contracts. To achieve optimal results from this testing, we need to limit the liquidity that’s coming into the pools, hence our reason for initial whitelisting.
Once we’ve seen periods of significant trading, and are comfortable that there are no risks to funds, we will remove the whitelist so everyone can deposit funds to the AMM pools. At this point we will start liquidity mining rewards for providers, which we believe will lead to a new spate of growth in TVL.