Mango DAO 🤝 Project Serum: trading competitions 🏋️
Competitions have come to an end! It’s been a great 8 weeks, and in this report we’ll go over what we have achieved 🏆
Context
Project Serum granted 500,000 $SRM to the Mango DAO with the objective of running an incentive program, aimed at increasing volume flow and improving liquidity.
Further details can be seen in the grant proposal @ the Project Serum forums:
Results
- > 50% tighter spreads for the most common order sizes - a major boost in liquidity
- Volumes coming from Mango Markets went from constituting roughly a third of total Serum volumes to being more than half
- The program almost wholly paid for itself, with > 300,000 USDC in fees generated from Mango alone throughout its duration
Methodology
Psst! You can follow along this analysis using https://github.com/waterquarks/serumlysis. It includes the necessary data & code so as to reproduce the exact results below.
Liquidity
We examined the order book at different points in the competition, calculating spreads for the more typical order sizes. The plotted results look as follows:
Books see significantly reduced spreads just 2 weeks into the incentive program, which get even tighter as the weeks go on due to increased competition between market makers — all aiming to have the most possible volume market share.
Volume & Fees
For this part of the analysis we examined all trades done 2 months before the start of the incentives program up until its end.
Volumes
Even though Serum volumes decreased as a whole, Mango’s share remained fairly steady — in fact, over the course of the competitions Mango constituted more than half of the total Serum volume.
Fees
Of course an uptick in volume attribution directly translates into an increase in fee provenance: over the course of the competition, Mango contributed more than 60% of the total Serum fee revenues.
Conclusion
All in all, we can confidently say that the incentive program was a success. Its positive impact on liquidity and revenue generation was readily apparent and at a reasonable cost for all parties involved.
In order to preserve the liquidity improvements, the team at GM Research, which runs the Mango Liquidity Council, suggests adding a maker rebate of 1 bps. Although the data points towards a 2 bps rebate, a 1 bps rebate would be in accord to what other major exchanges currently offer.
We look forward to future partnerships with Project Serum 🤝
