LIP#16: Trading Incentive Improvement

MOTIVATION

Traders are the lifeblood of Level and we want to substantially improve the platform’s rewards mechanism. In this proposal, we will detail a transition plan from the existing static lyLVL rewards to a dynamic leaderboard-based incentive structure. The goal is to improve quality of life experiences while dynamically adding additional LVL incentives when volume gets high.

MECHANISM

1. LVL incentives will scale to Protocol Revenue:

• Additional LVL bonuses will be added daily with each tier of threshold cleared
• Each day will begin with a baseline bonus of $50,000 worth of LVL when the minimal daily hurdle of $100,000 is reached.
• Additional trading incentives are added based on clearing milestones in $100,000 fee hurdles. Each milestone will result in an additional $20,000 worth of LVL rewards being added to that day’s pool as bonus incentives. Bonus distribution curve would be based on leaderboard ranking.
  • Level 0: Revenue = $100,000 => $50,000 worth of LVL
  • Level 1: Revenue = $150,000 => additional $20,000 worth of LVL
  • Level 2: Revenue = $200,000 => additional $20,000 worth of LVL
  • ...
  • Level n: n = [Revenue - $100,000]/$50,000 Total LVL Reward = n*$20,000 + $50,000
• The total daily LVL rewards for trading will be capped at 30,000 LVL tokens
• 24-hour TWAP will be used to determine the amount of LVL rewards

2. Leaderboard:

• At the end of each 24 hour period, the top 20 ranked traders in the leaderboard will be awarded a special bonus (all traders will still benefit from lyLVL as before)
• Rank will be decided by Ladder Points
• Ladder Point will be calculated based on Trader’s total contribution to the protocol on that day, multiplied by (1 + multiplier_point).
• multiplier_point will be determined by the trader's total number of LVL tokens staked on the platform (DAO + Yield). Every 1 LVL staked will translate to a boosting factor of 1 bps. 100 LVL = 1% boost.

3. Anti-recycling

• So as to disincentivize an unscrupulous minority from recycling staked LVL across multiple wallets, we will implement a 40 bps deposit fee for any LVL tokens staked. This should hardly affect 99.99% of the existing user base currently staking LVL in both the DAO as well as Yield pools as it’s easily covered by the daily interest generated by the pools.

VOTING OPTIONS

Choose one of the following options to vote on:

YES - Agree with this proposal NO - Take no action.

ELIGIBILITY

Only LGO token holders are eligible to vote.