Fee Rebate For Select Large Traders

Username

🌈 Burt Rock | Kwenta (5x)#7445

Grant Description

The Fee Rebate For Large Traders provides a 100% fee rebate for select traders on their first $1mm of notional trading volume. Traders will have 21 days to complete the program, and fee rebates will be paid at the end of the 21 day period. Fee rebates will be paid in the token(s) of Kwenta's choosing (OP token to start) and will be paid based on the market value of the chosen token at the time of payment.

A referral program will also be included in which previously selected Kwenta community members will have the opportunity to serve as ambassadors for the program, and earn a referral bonus of 1,250 OP if they refer a trader who is chosen and competes the program.

Overview

High volume traders generate the majority of fees on Kwenta for SNX stakers, and are most likely to benefit from Kwenta's unique value proposition of offering 0 slippage on any trade size. There are currently 91 unique wallets which have generated at least $1mm in notional volume out of 3,996 total traders. Onboarding traders in this category will be the most targeted way to grow Synthetic Futures volume.

100% fee rebate with a small bonus upon hitting this target should be an attractive enough value proposition to encourage a trader to try Kwenta since this rebate makes Kwenta the de-facto least expensive way to trade over the course of the program. The "white glove" recruitment, application process, and point of contact with the trader aid in trader retention by providing direct support, and detailed feedback from our most valuable traders.

Value to Synthetix

Although any incentive structure which increases volume has some positive impact for Synthetix stakers, the structure of this program is one of the most cost effective approaches to incentives and highly likely to result in direct profit. Since the costs are directly tied to fees paid, dollar for dollar, and stakers collect these fees, it is difficult for Synthetix to spend more on the program than it generates.

If the program is successful in attracting traders who can be retained after the conclusion of the program, or results in any additional publicity or successful onboarding aside from traders who participate directly, then ongoing fee revenue could result from a small one-time expenditure. Additionally, traders on average do not achieve a positive PnL from their trades, and the Synthetic Futures product has resulted in debt reduction for stakers overall. Although this cannot be guaranteed, historical trader performance suggests that Synthetic Futures volume is profitable flow overall.

Additionally, feedback from these traders can be collected and shared with Synthetix as the Synthetic Futures product is tweaked and improved, which could serve as a form of highly targeted market research.

Project Implementation Plan

Due to the individualized nature of the incentive program, the infrastructure requirements are low, and success of the program is dependent mainly on manual implementation by the Kwenta team. One of the largest pieces of infrastructure needed is the typeform used to apply for the program. For the trial version of this program, fees paid and volume will be tracked manually, and rebates will be sent manually at the conclusion of the program. If this program proves infrastructure built in to the Kwenta dapp could be considered, but it is unnecessary for the trial program which will track no more than 3 traders simultaneously.

Recruitment is expected to take 7-14 days in order to identify, vet, and schedule a first interview with the 3 initial traders who will participate in the program, then another 21 days for each trader to complete the program. If there is additional budget, the process can be repeated with new traders.

Additional Information

Funding Request

We are requesting 50,000 OP to use as trader incentives, which can be used to onboard a minimum of 3 traders given the 15,000 OP maximum incentive, however we expect will be enough to fund incentives for 7-9 traders. The program will be repeated until all these OP incentives have been used to fund direct trading volume.

We are also requesting 2,500 OP tokens to be used for a referral program which rewards community members for helping to identify and onboard these traders.

Total budget 52,500 OP.

At the conclusion, we will use the information collected to evaluate the costs and benefits of continuing or scaling the program and can consider additional funding sources at that time.