Trade Reward(T2E) Program

The more bin fees you pay, the more CHRMAs you get!

Objective of the Trade Reward Program

The Trade Reward Program is a strategic initiative designed to foster active engagement from traders, who are integral to the protocol DAO right from its launch. The program's primary objective is to airdrop points in proportion to trading fees, and the points can be converted into CHRMA tokens after listing on the DEX. The CHRMA token is scheduled for a DEX listing through a launchpad in the first half of 2024. Until the TGE, you can check the CHRMA acquired through the UX provided (refreshed every 5 minutes).

Basic Principles of the Trade Reward Program Design

The program operates under the assumption that traders who engage in higher volumes of transactions and consequently pay more fees, contribute significantly to the protocol's activation. Therefore, the rewards are structured to be proportional to the trading fees. However, to prevent the monopolization of CHRMA by a few whale traders and to prevent a small group of people from taking most of the shares of a protocol DAO, a quadratic funding mechanism has been incorporated into the Trade Reward Program. This mechanism ensures that rewards are not directly proportional to the fees paid but are in proportion to the square root.

After distributing Trade Rewards using the quadratic method since the start of Season 1, we are changing to a method where rewards will be distributed in proportion to the Trade Fee from 0:00 on March 12th UTC until the end of Season 1 to address the issue of increasing individual trade costs such as gas fees.

This program is designed to endure for over six years post the protocol launch, with an allocation of 32,000,000 tokens (equivalent to 32% of the total token supply). The program is structured to allocate more rewards in the initial stages to stimulate protocol activation, with a gradual decrease in reward allocation over time.

Additionally, a Referral Program has been established to acquire more traders for protocol activation, with rewards allocated to the referrer based on the fees paid by the referrals they brought.

Settlement Time and Currency

Each market operates with distinct settlement tokens, and traders pay trading fees in these different settlement tokens. The value of trading fees paid in different settlement tokens can fluctuate depending on the time of calculation. To address this issue equitably, the USD conversion price at the time of trading fee payment is sourced from the oracle and logged as an event on-chain. Rewards are then paid based on the logged USD-converted trading fee at the time of reward settlement.

Trade Reward Distribution

The trading rewards formula is based on the quadratic funding mechanism as mentioned above and is as follows:

Since the quadratic method has changed to a proportional method starting from 0:00 on March 12th, this equation is temporarily suspended, and the following equation is now in effect.

Where

• $r_i$ : The amount of rewards that trader $i$ receives

• $R$ : Total amount of allocated rewards for the settlement

• $n$ : Total number of traders

• $f_i$ : Total trading fees paid by trader $i$

  • Trading fees are aggregated at the USD conversion price at the time of payment.

• $x_i$ : Boosting rate of trader $i$'s referrer

  • The referral program is to acquire traders, and additional rewards of $x_i$% are paid to traders who participate through a referrer.

• $y_i$ : Rebate rate of trader $i$'s referrer

• $M$ : Lower limit of rewards unit price

  • In some cases, the total trading fees paid by traders may be very small during a certain period. In this case, it is possible to get a lot of rewards with very small trading fees, which has a negative impact on the token price and works against existing token holders. To prevent this, a lower limit for receiving rewards has been set. (Currently set to 0.05)

Example Scenario

Let's take a look at an example to better understand the rewards allocation mechanism. Suppose the total daily rewards allocated is 5,000 CHRMA. During this period, two traders, Alice and Bob, have paid trading fees. Alice paid $25 in fees, while Bob paid $100. Bob participated through referrer Carol and received an additional 7% boost, while Carol received a 5% rebate.

The rewards calculations for Alice and Bob would be as follows:

$$r_{alice} = min(5000, \frac{125}{0.05}) \times \frac{25}{25 + 100 \times 1.07 \times 1.05} ≅ 455.04 \ CHRMA$$

$$r_{bob} = min(5000, \frac{125}{0.05}) \times \frac{100 \times 1.1}{25 + 100 \times 1.07 \times 1.05} ≅ 1947.58 \ CHRMA$$

It's important to note that even though Bob paid 4 times more in fees than Alice, due to the quadratic funding mechanism, he only received approximately twice the rewards. Also, because Bob participated through referrer Carol, he received an additional 10% CHRMA. This example illustrates the effectiveness of the quadratic funding mechanism and the added benefits of the referral program.

Trade Reward Vesting

After TGE, the points received as reward can be exchanged 1:1 with CHRMA tokens without vesting. UX that can claim CHRMA tokens will be provided for one month after TGE, and the CHRMA that are not claimed during this period will be burned.

Trade Reward Program Season 1

Schedule

Trade Reward Program Season 1 starts 28th February 00:00(UTC Time) and will be ongoing until 31 March 2024. If the liquidity pool become fully supplied from Liquidity Boost Round #0's warm up period before 28th February, the warm-up period will end earlier than planned, and the Trade Reward Program will also commence sooner. The starting day will be 2 days after the end of the warm-up period.

Epoch

Trade Reward Program Season 1's epochs have a cycle of 1 day, with a daily basis settlement. Rewards aggregation and settlement are conducted every day at UTC 00:00.

Allocation

• Allocated rewards for Season 1 is a total of 1,500,000 CHRMA (equivalent to 1.5% of the total token supply).

• CHRMA daily allocation: FLOOR(1,500,000 / ( 2024.03.31 - Trade Reward Program starting date + 1), 2)

• CHRMA minimum unit price: 0.05 USDT

• Credit daily allocation: 162,000 Credits

• Booster daily allocation: 1,620 Boosters

The daily rewards allocation is calculated as the total allocation / the number of protocol operation days from the T2E launch date to the last day of Season 1. (Calculated to two decimal places and rounded down)

If the Trade Reward Program experiences low participation and the allocated amount is not fully utilized, the remaining rewards will be rolled over to the next season.

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And one more thing..

Credits and Boosters

During Airdrop Season 1, in addition to the CHRMA received through the T2E program, traders will also receive additional Credits & Boosters from the Airdrop Program. Approximately 30% of the planned Airdrop allocation for Season 1 (to be determined between 1M to 3M) is designed to be distributed as Trading Rewards.

Quadratic Distribution

We aim to consistently apply the quadratic funding mechanism used in the Trading Reward Program here as well. This is to prevent monopolies and ensure that as many participants as possible benefit from the token distribution.

The distribution of Credit and Booster will also be proportional to the trading fees from 0:00 on March 12th until the end of Season 1.

Trader's daily dividend credit formula (in LaTeX notation):

Since the quadratic method has changed to a proportional method starting from 0:00 on March 12th, this equation is temporarily suspended, and the following equation is now in effect.

Where:

• $N$ : Daily total credit allocation

• $C_i$ : Daily reward credit for Trader $i$

• $x_i$ : Trading fees submitted by Trader $i$ (in USD)

Trader's daily dividend booster formula:

• $C_i$ : Daily reward credit for Trader $i$

• $B_i$ : Daily reward booster for Trader $i$