The road to the Contango token launch
Contango has launched a second phase for its points system, leading up to its token launch.
Key takeaways
- In the previous phase, 5,548,359 points were allocated to early traders and users who supported Contango via product feedback and evangelization efforts.
- Points will grant users a claim on Contango tokens, after a successful token launch.
- A new phase will start today, Wednesday 27th of March 2024, allocating a fixed amount of 1,000,000 points per week (tapping into a new allocation of the token supply).
- Points for trading were and are computed with a formula that takes into account volume and open interest.
- This new phase starts today and will last up to our token launch, planned for this Q2.
The previous phase
On the 24th of January 2024 we announced the Contango points system. The goal of this system was to incentivize product usage by stimulating volumes and open interest, as well as gather product feedback and reward bugs reporting.
We can argue this has ultimately proven successful:
- It increases our total volume by 6x, with a total current volume of $125M.
- It increased our open interest (OI) by 5x increase with a current OI of 40M$.
- Increase our number of users by 10x, from an average of 20 unique wallet addresses per day to an average of 200 in the past 2 weeks.
- We collected 200+ comments on product feedback and bug fixes.
- We collected 100+ content submissions which helped us spread the word about Contango across Twitter and DeBank.
The total points distributed for this phase were 5,548,359. You can find more details in the chart and table below. Week 0 refers to early users of Contango v1 (since 2022) and v2 (since 2023), who were given an early bonus.
Thanks to all traders and evangelizers! Hope you guys made it to the top of the points leaderboard.
You can find more details on the formula used for allocation at the end of this article.
More stats about Contango can be found on Dune.
The next phase
Given the success of the points program, and in anticipation of the Contango token launch, we decided to keep rewarding users who make a valuable use of the protocol by either trading and reporting bugs. For this, we decided to allocate more Contango supply to our point system, so that users of the previous phase won’t get diluted.
This phase will last until the Contango token launch, planned for Q2 this year (sooner than what you might think!).
- During this phase a fixed amount of 1,000,000 points will be distributed per week, in line with the recent weekly allocations, to traders.
- Extra points will be allocated to bugs reporting on Discord, at the discretion of the Contango team.
The fixed amount will add a spicy competition among traders: if you’re the only one trading, you’ll get the entire pie for that week!
The formula for allocation will be the same as the previous phase and will account, through a weighting system, for both volume and OI. The latter is measured every minute across all markets and averaged across a given epoch (week).
Even if this information was already enough to clearly disincentivize sybil attempts and wash-trading in the previous phase, we decided to disclose the full formula (see section at the end) to make it crystal clear that any attempt at gaming the system will not earn you any points and future rewards.
If you are this guy, please be aware you will earn 0 (zero) points.
In other words: points computation for this phase is identical to the previous one. What is changing is the number of points allocated each week: instead of depending on the adjusted volume of the week, this is now fixed to 1,000,000.
More details on the formula employed can be found at the end of this article.
FAQs
Will points earn me a share of Contango tokens?
- Yes, points will grant users a claim on Contango tokens.
Can I still earn points by creating content about Contango?
- No, that was only possible in the previous phase. Thanks to all those who submitted content!
Can I still earn points by reporting issues and bugs?
- Yes, we’ll allocate some extra points for this, as long as the reported bugs or issues are relevant, have not been reported before or are not known by the Contango team. The Contango team reserves the right to allocate these extra points at its discretion.
Will my existing points be diluted by this new phase?
- No, a new percentage of the Contango token supply will be allocated to this new phase.
When is this new phase starting and when will it end?
- This new phase starts where the previous one finished, so at 00:00 UTC on Wednesday 27th of March 2024. It ends with the Contango token launch, planned for Q2 this year.
How are weeks calculated?
- Weeks for points allocation start every Wednesday at 00:00 UTC and end every Tuesday at 23:59 UTC.
Wen token?
- The only official sources of information for the exact date will be our Twitter and Discord. Please beware of scams. Never click links outside of the official channels.
How can I maximize my points?
- In a nutshell, to accrue points you want both volume and open interest to be > 0 in a given week. Read the formula details at the end of the article for full context.
Does holding a position accrue points?
- The formula used to compute points for each week multiplies volume (V) and open interest (OI) and weights each component with an exponential. So, holding open positions for longer is incentivized, while wash trading is disincentivized. While both V and OI are required in a given week to earn points, V has a higher weight than OI. To accrue points you basically want V and OI to be > 0 in a given week. The longer you keep a position in e.g. week 1, the more points you get in week 1. However, if this position remains open in week 2, and you don’t trade, you will accrue no points for week 2. If you trade in week 2 on the same instrument (read: pair), the OI you have from week 1 will magnify the points collected in week 2. If you trade the same instrument on a different chain or market it still counts towards point allocation as the formula aggregates volume on a per instrument basis.
Does holding a position accrue points
What actions accrue points while trading?
- Opening, closing and modifying size all contribute to volume changes, so these actions accrue points. Increasing leverage is equal to crystalizing some PnL so, as long as you don’t modify size, then it won’t count towards points allocation. E.g. if you open a position in week 1 (e.g. + 10 ETH), then you have some volume in week 1, and if you reduce its size (e.g. -2 ETH) in week 2 you have some volume , so you’ll earn points on both weeks.
Where can I check stats on the current volumes and open interest?
- On the Contango Dune dashboard.
Appendix: point computations
Overview
The following formulas, similar to the dydx reward formulas derived from the Cobb-Douglas function, determine how many points are allocated to each trader. At the end of an epoch, all Trader Scores are aggregated and points are proportionally distributed:
The trading score is computed across all n trading pairs available on all protocols and chains on Contango. The index i represents a trading pair among all n trading pairs available. The following section explains how each parameter is computed.
Formula parameters
1. Correlation coefficient
Opening positions on a trading pair with correlated assets, e.g. wstETHETH, does not involve the same level of risk and leverage as opening a position on a trading pair with non correlated assets, e.g. ETHUSDC. This is reflected in the Correlation Coefficient C in the trader score formula:
- If the trading pair i has correlated assets then Ci = 0.2
- If the trading pair i has non-correlated assets then Ci = 1
In other words, all things being equal, volume on non-correlated assets would entitle traders to get 5 times more points.
2. Volume
Volume is an important metric to measure trading activity. Hence, the more volume a trader achieves, the more points the trader gets.
3. Open interest
Open interest is measured every minute across all markets on the different chains and averaged across a given week. If a position is opened for a few minutes then the average open interest during the week is going to be close to 0. Therefore, opening and holding open positions for longer is incentivized, while wash trading is disincentivized.
4. Weights
A weight of 0.7 is attributed to volume while a weight of 0.3 is attributed to open interest. While both volume and Open Interest are required in a given epoch to earn points, volume has a higher weight than open interest. Given the Cobb-douglas function when exponents sum-up to 1 (0.7+0.3=1, see Wikipedia for more info):
- A 1% increase in adjusted volume would lead to approximately a 0.7% increase in a user’s Trader Score with non-correlated trading pairs.
- A 1% increase in average open interest would lead to approximately a 0.3% increase in a user’s Trader Score with non-correlated trading pairs.
Traders are encouraged to trade from one account. Splitting trades into multiple accounts in a given epoch results in fewer points (e.g. (4^(0.3)2^(0.7) + 2^(0.3)4^(0.7)) < (6^(0.3)*6^(0.7)).
5. Period points
Previous phase:
Adjusted volume was defined as the sum of the volumes on all trading pairs / protocols / chains, adjusted by the coefficient C (taking the value 1 for non-correlated trading pairs and 0.2 for correlated ones):
For each 1$ of adjusted volume traded in a week, 10% of points were distributed. E.g. if 1000$ of adjusted volume was traded then 100 points were distributed.
Next phase: a fixed amount of 1,000,000 points is allocated for each week.
Example
Let’s walk through an example to determine a trader’s point in the next phase where 1,000,000 points are allocated in a given week. Our trader opens his first 2 positions at the start of the week which remained opened for the lifetime of the week:
- 1 position worth 100,000$ on ETHUSDC
- 1 position worth 350,000$ on wsETHETH.
The trader’s score is:
Let’s assume that the total trader score for the period is 10,000,000. Hence the trader’s points are:
About Contango
Contango lets you loop anything on-chain. You can create leverage (re)staking positions, arb rates differentials, farm points, or simply go long or short like a perp at low funding. Ape in like a degen with 1-click Strategies, or trade like a pro on the sleek Trade interface.
