Liquidity Incentive Program - May Summary

Liquidity Incentive Program - May Summary

GM Flippers,

We have reached the end of May, which also means it's time to conclude this month's liquidity results and rewards, and announce the incentive available for June.

General Summary

In the first month of the program, we did not see substantial increases in liquidity or pricing competitiveness. We also observed several externalities which complicated LP’s positions and made it difficult to commit more. Only $60m of the $200m target was achieved - still the highest month on record, but short of where we wanted to be.

There are a couple of main reasons we can see why this didn’t work out the first time round:

  1. It is very difficult to work out how well you are performing as an LP without investing significant work in pulling data from the state chain manually. I personally wouldn’t commit more capital without knowing it’s making my rewards more effective, and so it’s unreasonable to expect anything less from other LPs. To address this, we are doing significant work to improve the LP stats page, where ti will show who is getting the fill volume on a daily/weekly/monthly basis.
  2. The incentives provided weren’t sufficient to justify significant risk-taking.
  3. Issues with liquidity getting locked on exchanges limited the ability of LPs to trade. Steps have been taken to reduce this exposure, but days of trading were lost.

Regardless, here are the summarised results:

The full results can be seen here:

Making Claims

Any LP with more than $1000 USD of fill volume will be entitled to make a claim before June 15th.

Because this program will be manually administered by Chainflip Labs, for legal reasons Chainflip Labs reserves the right to deny any claims for any reason.

Required Information:

  • LP Account Address (State Chain Account)
  • Proof of Ownership (A signed message from the state-chain LP account(s))
  • Email Address
  • Entity KYC information (First claim only)
  • Receiving Address
  • Valid Business Invoice

Although LPs are not generally required to provide additional information, it may be required in order to process certain claims.

Successful claims will be distributed at the end of each claim window.

Claims must be submitted to this form before June 15th, 2024:

Rewards for June 2024

We will run the program once again to prove our commitment to this scheme, even though the data visibility is still poor. We will also reduce the bonus volume threshold to $150m monthly volume.

We wish to make it clear to LPs that if they would like help determining how they are performing, we would be happy to help expose daily volume stats until the data can be seen on the web app at will. This way strategies can be adjusted on a daily basis to optimise for rewards and for volume.

Chainflip is offering a total maximum reward for the month of June as 12,000 FLIP, with 8,000 FLIP as a base reward and a further 4,000 FLIP if the monthly protocol volume exceeds $150m.

If data visibility increases, by the end of June we will likely increase the rewards to encourage data-rich competition.