Author Topic: Market making contest, stage one  (Read 24585 times)

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Offline abit

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Market making contest, stage one
« on: October 13, 2019, 09:43:22 pm »
The DEX needs liquidity.
Market makers who leave orders on the market provide liquidity.
The contest is to incentivize market makers, consequentially attract traders and bring volume to the DEX.

## Rewards
Up to 60,000 BTS every day. Funding by the committee.

## Start Date
2019-10-25 0:00:00 UTC
End date not yet decided.

## Markets
BTS / [gateways].BTC
BTS / [gateways].USDT
(30,000 BTS each)

## Gateways
Gateways who have interest in participating in the contest please reply to this thread.
Every gateway needs to prove that its gateway assets are fully backed by real assets.

(The lists below will be updated from time to time as the contest progresses)

### qualified gateway asset(s):
SPARKDEX.BTC https://audit.bitspark.io/
RUDEX.BTC https://audit.rudex.org/
GDEX.BTC https://www.gdex.io/noticeAssets
GDEX.USDT https://www.gdex.io/noticeAssets

### gateway assets that are replied in this thread buy not yet qualified:
XBTSX.X

## Rules

### Brief
Market makers place orders onto the order book.
The bigger the orders and
the closer the orders to the opposite side of the order book and
the longer the orders lasting on the order book,
the more rewards the owner of the orders will earn.

### Details

For each market, 98% of total reward will go to BTS buyers and the rest will go to BTS sellers.
(Note: The committee will have the right to update the percentages as the contest progresses. Updates will be announced in advance.)

After each block is produced, a snapshot of the order book will be captured. Every order on the markets will be scored.

The orders whose size is smaller than 100 BTS will be ignored when calculating.
Get the lowest ask price (LAP) and highest bid price (HBP) of the remaining order book.
For bids (orders buying BTS), order_distance = (LAP - order_price) / LAP
For asks (orders selling BTS), order_distance = (order_price - HBP) / order_price

Group 1: orders whose order_distance is within [0%, 1%] will share up to 53% of total reward;
Group 2: orders whose order_distance is within (1%, 2%] will share up to 25% of total reward;
Group 3: orders whose order_distance is within (2%, 3%] will share up to 12% of total reward;
Group 4: orders whose order_distance is within (3%, 5%] will share up to 6% of total reward;
Group 5: orders whose order_distance is within (5%, 7%] will share up to 3% of total reward;
Group 6: orders whose order_distance is within (7%, 10%] will share up to 1% of total reward.

For each group, group_score = group_reward_percent * min(1, total_order_size / 1,000,000 BTS).

For each order within a group,
order_weight = order_size * ( 1 + (group_upper_bound - order_distance) / (group_upper_bound - group_lower_bound) )
order_score = group_score * order_weight / sum(order_weight)

For each day,
for each market group, specifically, BTS / [gateways].BTC or BTS / [gateways].USDT,
daily_bids_reward = 30,000 BTS * bids_reward_percent * sum(bids_group_score) / total_blocks_produced_in_that_day
daily_asks_reward = 30,000 BTS * asks_reward_percent * sum(asks_group_score) / total_blocks_produced_in_that_day

For traders,
account_bids_reward = daily_bids_reward * sum(bids_order_score) / sum(bids_group_score)
account_asks_reward = daily_asks_reward * sum(asks_order_score) / sum(asks_group_score)
account_daily_reward = account_bids_reward + account_asks_reward

## Reward Data

https://bitsharestalk.org/index.php?topic=29693.75 and following pages.

Can also check blockchain explorers or web wallets:
https://bts.ai/details/account/committee-trade
https://cryptofresh.com/u/committee-trade
https://wallet.bitshares.org/#/account/committee-trade

### How to verify the reward data

1. run a patched (https://github.com/abitmore/bitshares-core/tree/ugly-3.0 ) delayed node (https://github.com/bitshares/bitshares-core/wiki/Delayed-Node) to generate snapshots (update "config.ini" as follows)
Code: [Select]
# Ugly snapshot start block number
ugly-snapshot-start-block = 42000000

# Ugly snapshot markets
ugly-snapshot-markets = [ ["1.3.0","1.3.861"], ["1.3.0","1.3.1570"], ["1.3.0","1.3.2241"], ["1.3.0","1.3.3926"], ["1.3.0","1.3.4157"], ["1.3.0","1.3.4198"], ["1.3.0","1.3.1042"], ["1.3.0","1.3.5144"], ["1.3.0","1.3.5286"] ]

#  "id": "1.3.861", "symbol": "OPEN.BTC",
#  "id": "1.3.1570", "symbol": "BRIDGE.BTC",
#  "id": "1.3.2241", "symbol": "GDEX.BTC",
#  "id": "1.3.3926", "symbol": "RUDEX.BTC",
#  "id": "1.3.4157", "symbol": "XBTSX.BTC",
#  "id": "1.3.4198", "symbol": "SPARKDEX.BTC",
#
#  "id": "1.3.1042", "symbol": "OPEN.USDT",
#  "id": "1.3.5144", "symbol": "BRIDGE.USDT",
#  "id": "1.3.5286", "symbol": "GDEX.USDT",

p2p-endpoint = 127.0.0.1:0
seed-nodes = []
trusted-node = 127.0.0.1:8090

#...
plugins = delayed_node


2. Run the Ruby script (https://github.com/abitmore/bts-mmcontest-scripts) to calculate rewards from the snapshot files


## Testnet Simulation

https://bitsharestalk.org/index.php?topic=29693.msg336265#msg336265
(Current status: the markets are open but rewards won't be sent out)

## Links
BitShares News: https://news.bitshares.org/bitshares-trading-contest/
Steemit: https://steemit.com/bitshares/@abit/the-bitshares-dex-market-making-contest-will-live-soon
Twitter: https://twitter.com/BitSharesOrg/status/1187654212630351872
Telegram: https://t.me/bitshares_marketing
Wechat: please add GDEXxiaozhushou and send message "BTS" to join the group
Chinese post: https://bitsharestalk.org/index.php?topic=29665.0
Chinese post: https://dpos.club/t/topic/14
« Last Edit: November 08, 2019, 12:01:21 pm by abit »
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Offline abit

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Re: Planning a market making contest
« Reply #1 on: October 13, 2019, 09:44:20 pm »
« Last Edit: October 13, 2019, 10:23:22 pm by abit »
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Online pc

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Re: Planning a market making contest
« Reply #2 on: October 13, 2019, 10:21:21 pm »
IIRC the "liquidity reward" that existed in the early days of STEEM was scrapped because the system was essentially gamed by a certain user, without providing any real benefit. How do you intend to prevent this here?

Quote
Up to 60,000 BTS every day. Funding by the committee.

Also, since when does the committee decide on funds with such volume without asking for shareholder approval first?

There are currently several important workers not voted in who are asking for less than 60k/day *in total*:

#11    201903-bitshares.org-exotic-infrastructure 4,360 BTS
#12    201904-hackthedex 1,707 BTS
#13    201907-steemfest 3,756 BTS
#15    201902-bitshares-ui 45,157 BTS
#16    201902-infrastructure 5,880 BTS
Bitcoin - Perspektive oder Risiko? ISBN 978-3-8442-6568-2 http://bitcoin.quisquis.de

Offline abit

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Re: Planning a market making contest
« Reply #3 on: October 13, 2019, 10:28:39 pm »
IIRC the "liquidity reward" that existed in the early days of STEEM was scrapped because the system was essentially gamed by a certain user, without providing any real benefit. How do you intend to prevent this here?
I was the main person who tried and gamed the STEEM liquidity reward. I know where the problems were, so in this proposal I try to avoid the problems.

To be fair, the STEEM liquidity reward did provide benefit, the liquidity was amazing during that period. But the costs were too high IMHO.

Quote
Quote
Up to 60,000 BTS every day. Funding by the committee.

Also, since when does the committee decide on funds with such volume without asking for shareholder approval first?

There are currently several important workers not voted in who are asking for less than 60k/day *in total*:

#11    201903-bitshares.org-exotic-infrastructure 4,360 BTS
#12    201904-hackthedex 1,707 BTS
#13    201907-steemfest 3,756 BTS
#15    201902-bitshares-ui 45,157 BTS
#16    201902-infrastructure 5,880 BTS
This proposal is created by me personally (but not the committee), for discussion. It still needs approvals from the community.
« Last Edit: October 13, 2019, 10:31:30 pm by abit »
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Offline bench

Re: Planning a market making contest
« Reply #4 on: October 13, 2019, 10:31:45 pm »
Quote from: abit

## Rewards
Up to 60,000 BTS every day. Funding by the committee.
Why do we need any committee funds here? Which committee member supports this?

Committee funds should be used to increase reserve pool or worker funding and not for fun.
Be part of the change and vote for the bitshares-vision proxy!

Offline abit

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Re: Planning a market making contest
« Reply #5 on: October 13, 2019, 10:33:42 pm »
Quote from: abit

## Rewards
Up to 60,000 BTS every day. Funding by the committee.
Why do we need any committee funds here? Which committee member supports this?

Committee funds should be used to increase reserve pool or worker funding and not for fun.
You prefer funding it via worker?
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Offline bench

Re: Planning a market making contest
« Reply #6 on: October 13, 2019, 11:42:21 pm »
You prefer funding it via worker?
The funding looks very high and price pool should not be the main motivation to take part in the contest.
Be part of the change and vote for the bitshares-vision proxy!

Online sschiessl

Re: Planning a market making contest
« Reply #7 on: October 14, 2019, 06:34:11 am »
## Gateways
Gateways who have interest in participating in the contest please reply to this thread.
Every gateway needs to prove that its gateway assets are fully backed by real assets, like https://audit.bitspark.io/

Agreed, gateways should voice their support and willingness to be used as one of the turning points for this contest. Since it's basically free advertisement, they might consider reducing or reimbursing market fees?

What do you think with having a flexible bounty per day, that the committee adjusts? I could imagine that would lead to a better distribution, starting low and increasing it, more people will take notice after it has started and might jump in.

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Re: Planning a market making contest
« Reply #8 on: October 14, 2019, 07:01:41 am »
As I'm not really a trader, I can't really comment on the specifics of the contest and whether it can be gamed or not. Nor whether it can have the desired effect.

 I hope others, more knowledgeable will add their input (@Alt? @thule)

I do however want to say that we've been debating what to do with committee funds for ages. Burning it back to reserve is the obvious one but I've always believed they can be put to better use.

Using them to fund workers is out of the question as there will be too many conflicts of interests and sets a bad precedent imho.

I'd rather see it go to off-chain activities (press releases, marketing, pre-sales activities etc.) but if people believe this will have a positive effect on DEX usage and liquidity then it's fine to me.

Furthermore, I've always maintained the position that the committee should be more proactive and should NOT have to request stakeholder approval for fund usage.

Essentially stakeholders have already given a vote of confidence to the committee members by voting them in (and can always unvote them immediately if they see them really overstepping that mandate prior to proposal expiry). So no, IMHO committee should NOT need to ask further approval before taking action. And I say this regardless of current voting weight situation (which everyone knows I'm not thrilled with)


Offline abit

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Re: Planning a market making contest
« Reply #9 on: October 14, 2019, 07:19:05 am »
As I'm not really a trader, I can't really comment on the specifics of the contest and whether it can be gamed or not. Nor whether it can have the desired effect.


Whether it can have the desired effect is what I care the most right now.

What do you think with having a flexible bounty per day, that the committee adjusts? I could imagine that would lead to a better distribution, starting low and increasing it, more people will take notice after it has started and might jump in.

The flexible bounty is already in the rules. The committee would be able to adjust rules as the contest progressing.

The funding looks very high and price pool should not be the main motivation to take part in the contest.

It **looks** very high, yes. It's the part that attracts eye balls.
If you understand the rules you should realize that great efforts would be needed to get the rewards, and, the efforts would improve liquidity a lot, which would justify the reward IMHO.
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Offline George_Bitspark

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Re: Planning a market making contest
« Reply #10 on: October 14, 2019, 07:32:56 am »
Thanks for taking the initiative on this Abit. How long would this go on for, didnt see it mentioned in the post? The formula here seems fine as it appears to reward just posting of collateral on the DEX for liquidity rather than something like volume which can be easily gamed. Where would the snapshots be hosted so everyone can see openly the calcs? We at Bitspark (dex.bitspark.io) would be happy to join in this initiative with the sparkdex.BTC / BTS market and any other markets the community may see value in. We can perhaps have some promotional low/no fee period for the duration of this too and assist with marketing this through our channels.
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Offline xeroc

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Re: Planning a market making contest
« Reply #11 on: October 14, 2019, 07:58:45 am »
Cool idea.
Given that abit made good expertiese with Bytemaster's liquidity proopsal on STEEM (which was canceled later on), i suppose he can figure out a way that this is not exploitable.

Looking forward to see how this works out.

My only concern is that it subsidizes 3rd party gateway with their market fees - but I suppose we should live with that.
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Offline FractalNode

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Re: Planning a market making contest
« Reply #12 on: October 14, 2019, 08:02:25 am »
I don't think BTC and USDT markets are so important or attractive. In my opinion, EOS and ETH are a much better choice as a way of entering DEX. I propose adding these 2 markets, I am aware that this will lower the prize for participants.

Offline George_Bitspark

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Re: Planning a market making contest
« Reply #13 on: October 14, 2019, 08:13:24 am »
BTC is the largest traded currency across all CEX's and DEX's for BTS and the highest liquidity so this should absolutely be one of the markets. If there is more liquidity on DEX for that it makes arbitrage from CEX/DEX more viable- would be a good time for DEXbot to showcase DEX/CEX arb but thats been coming for months not sure on update on that yet. If there are other currencies too that'd depend on community, right now USDT is not a star performer in liquidity or volume on DEX, ETH seems to do better.
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Offline bitcrab

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Re: Planning a market making contest
« Reply #14 on: October 14, 2019, 08:23:38 am »
GDEX greatly support this contest.
we will provide the asset proves of GDEX.BTC and GDEX.USDT in recent future.
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