PSWAP Rewards Part 3: Polkaswap Market Making Rebates

Polkaswap

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Polkaswap

4 min readMar 15, 2021

TL;DR

Approximately 400 million PSWAP are reserved for special PSWAP bonuses for market makers on Polkaswap
20,000,000 PSWAP will be given out per month until rewards run out. A month lasts 432000 blocks and the incentives will be calculated starting with the first block on the SORA network
To qualify, market makers must have at least 500 transactions with more than 1 XOR in each transaction (all transactions on Polkaswap involve XOR because XOR is a hub token)

𒊹𒂵𒆜・Rewards for Market Makers

To bootstrap the SORA and Polkaswap ecosystems at launch, three different strategic bonuses in PSWAP tokens will be available, consisting of approximately 64% of the total PSWAP supply. Previously, strategic bonuses for providing liquidity on Polkaswap and for buying XOR from the token bonding curve were explained. In this article, the third and final bonus is presented: special PSWAP rewards for market makers who trade on the Polkaswap DEX.

Market makers help to create efficient markets, yet DEXs are notorious for not having proper incentives for market making. In designing Polkaswap, we saw the need early on for creating an incentive program to bring in market makers as valuable ecosystem participants. However, doing this in a decentralized way, on-chain, is not always easy.

In our design, a total of 400 million PSWAP will be provided for market making rebates, with 20,000,000 PSWAP distributed every month for almost 2 years (20 months). The 20,000,000 PSWAP/month will be distributed proportionally (to transaction volume) to all market makers with over 500 transactions in a month, with an average TX involving 1 XOR or more (Network and Liquidity Provider fees are deducted, so make sure you swap enough XOR to cover these costs, remember, the more XOR you use in transactions, the better your rewards will be). If no market makers meet these criteria, then the rewards will not be distributed to anyone and will be saved for the future.

Vesting of Rewards

After being earned, rewards are not given instantly to the user. As with the Polkaswap liquidity reward farming program and the special PSWAP rewards for users who purchase XOR from the token bonding curve, PSWAP rewards earned by market making activities are distributed as a fraction of the daily burn. This gives guarantees that a sudden supply of tokens will not immediately flood the market and gives clear forward guidance about the supply of tokens in circulation.

The vesting speed depends on the amount of PSWAP burned from Polkaswap usage fees. Earned PSWAP are vested as Strategic Bonus Vesting, wherein the amount vested is a percentage of the daily amount of PSWAP burned in transaction fees, as shown in the figure below.

The PSWAP strategic bonus vesting curve is defined by the line: y=-0.000357x+1 until it reaches 0.45 (45%). Then it is flat until all rewards are vested.

PSWAP Rewards Claiming

Users can claim only vested tokens and the claiming will be possible at any time as long as there are non-zero rewards for an account.

Conclusions

Now you know the final PSWAP reward bonus! To incentivize efficient markets, the Polkaswap DEX has a decentralized reward pool to distribute to market makers. This is, to our knowledge, the first DEX to have such an incentive for market makers. We hope it will help encourage adoption and foster efficient and well-priced markets, all without central authorities!

About SORA NEO Network, Polkaswap, and Fearless Wallet

SORA is a new economic system aimed at creating a supranational, world economic system with built-in tools for decentralized finance (DeFi). The SORA network implements a new kind of parachain architecture on the Polkadot and Kusama network, with the capability to bridge external blockchains (like Ethereum) to the Polkadot ecosystem.

One of the DeFi applications that will run on the SORA network is Polkaswap, a non-custodial, liquidity aggregating, cross-chain AMM DEX designed uniquely for the Polkadot ecosystem. Polkaswap will offer boundless liquidity through its one-of-a-kind Aggregate Liquidity Technology (ALT).

Fearless Wallet is a mobile wallet designed for the decentralized future on the Kusama and Polkadot networks, with support for iOS and Android platforms. It offers an awesome user experience, fast performance, and secure storage for your accounts. Fearless Wallet will integrate Polkaswap functionality for easy, decentralized swaps of assets.