Grant for Trader Support and Customer Relationship Management

One of the problems we have been struggling a lot with in the recent months is improving liquidity on mango’s order books. It keeps core developers busy maintaining trading bots, monitoring liquidity incentives as well as hand-holding traders while they start to build their integrations with Mango.

In order to free up more time to work on core product, I have been looking for new contributors during the solana conference in Lisbon. One team that I met, seemed in particular well suited for this role and I have been since then scoping out a deal with them to join the DAO as contributors.

Let me introduce the founders of a trading firm called GM, who need to remain currently anonymous:

  1. their current day-job is building a very successful CEX
  2. they bring with them the experience of maintaining (from the CEX side) a successful DMM program for perpetual futures
  3. they have provided customer support to all kinds of traders from retail to institutional
  4. they have experience in trading themselves and managed to integrate their own trading system with Mango already

In order to make them quit their full-time positions and walk away from their well paid jobs, we scoped out a trial phase together, which will begin in early 2022. In order to give legal certainty to both sides, they requested to engage in a contract with the Blockworks Foundation, which will supervise their contributions. The indicative timeline for the contributions looks as follows:

  • Feb 1: Official start
  • Feb 7: Propose LP Rewards program on Mango Forum
  • Feb 15: Finalize design of LP rewards program
  • March 1: LP Program launched, sales and support functions clearly defined, structured and running, GM provides Backstop-liquidity to Mango
  • March 15: Significantly improved liquidity on Mango, so that the following order book depth, with spreads, if specified can be provided for at least 75% of the time.
  • April 1: At least 3 new onboards

I hereby request a grant of $150,000 in USDC to the Blockworks Foundation for the purpose of the described engagement. Any unused funds will be returned.

9 Likes

Does anyone know what it would cost to hire a market making firm to help provide similar liquidity?

This wont be directly comparable to the proposed approach, but I think it would be helpful to get some estimates to help in further decision making.

To be clear, I strongly support this proposal, but would also like to know if there’s a benchmark for what liquidity generally costs in the industry.

Just to clarify the goal for this grant is to attract talent that can help us design a program that attracts a multitude of market makers in competition while incentivized through an open access program.

We should probably post the status quo in comparison, which is roughly 2x to 3x worse, when measurable. I’ll try to get that data.

About the cost of just providing the liquidity maybe Alameda, Jump or Wintermute can give a quote.

2 Likes

These are the current spreads for various order sizes

1 Like

Dear Max, dear _69

Same as _69, I strongly support the proposal.

And I offer myself to ask Wintermute for a quote and post it here along with a bit of an explanation of their proposal or services offering as soon as possible, to serve as a benchmark.

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The current liquidity mining program costs the DAO 132k MNGO per day (approx USD 27k).

So, for the same cost as ~6 days of the liquidity mining program, GM will: help optimize the liquidity mining program parameters; work with current and prospective market makers to help them build out their systems on Mango; and provide backstop liquidity to the extent it is necessary?

If I’m understanding the arrangement correctly, it seems like a great idea.

One other thing I think we should consider is the possibility of using USDC instead of MNGO for the liquidity mining program. Using MNGO as payment can be a great way to align long term incentives for those that contribute to the project, but I’m not sure that applies as well to MMs. Because the mining incentives are just a payment for a service, MMs are likely going to sell the MNGO right away (even if they like the project). This is likely eroding the price of MNGO and may result in us needing to pay more MNGO in the future because of this decay (ie, there’s a compounding effect). USDC allows the MM to still buy MNGO if they choose. If we were to use USDC instead of MNGO, at current mining rates, we have 6 years of runway (assuming no other expenses).

4 Likes

I support this proposal,
The order book liquidity is crucial especially for Dex.
If the price spread for Mango (on Serum) if smaller than Raydium or Orca AMM,
it will be easier to convince users to trade on Mango.

And deeper liquidity definitely help to make the system more stable
( easier to liquidate the in danger position)

1 Like

Improving liquidity should definitely be a focus if we want Mango to be a CEXy DEX.

As Max has said, it shouldn’t be the job of the core developers as it distracts from other parts of the UI/UX and it isn’t their forte (for most?).

Bringing in people with the experience and ability to manage and attract more market makers is a worthwhile investment for users and the platform alike.

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Hi @pepeneif – were you able to contact Wintermute for a quote?

I also think that these are the right thoughts! Analyzing the behavior of the MNGO price, you can replace the pressure on it, obviously connected with the liquidity mining and their corresponding token sales. To relieve the load by rewarding miners in the stablecoin - can help relieve pressure from the MNGO and many investors will get a great attractiveness of the project!

1 Like