Incentivising trading on PERP markets

Hope to knock around some ideas on how to incentivise trading within the PERP pools. Right now there are participants making markets (due to MNGO rewards), but almost no volume. I believe that volume begets volume, and by getting new users on the platform, the entire system will grow.

While there are some subset of users that require a decentralized platform to trade on, the majority of volume is being done on centralized pools. What then, would encourage someone to use the Mango platform? The biggest advantage I can see would be cost. Mango can be cheaper than alternative decentralized margin platforms because of Solana’s infastructure, and it can be cheaper than CEX’s because of lower overhead.

I would propose lowering the take-fee of BTC-PERP to zero to initially attract users.

What Mango needs right now isn’t a few thousand dollars of revenue, but active thriving markets.

2 Likes

I think lowering taker fee to 0 is a bad idea for a few of reasons:

  1. wash-trading. it would be difficult to trust any volume anymore because someone can self-trade (with in same account or between two accounts they own) at only the cost of the SOL transactions

  2. MNGO value prop is not very compelling with a protocol earning 0 on its flagship product

  3. As soon as the fee is raised again, it will marginally price out those who were trading more because of 0 and we’re back to square one

I do agree that the fee should be lowered , however, so that the prices do not tend to be as sticky (someone is more likely to “take” a stale order and try to arb a smaller move if enabled). 5bp prices out a lot of this activity, and many larger traders on CEXes are used to 1-2bp (when considering all the incentives, like voume and marketmaker programs).

On that note it would also be interesting to add a volume volume component and MNGO-holding component to fees discounts but perhaps that’s for a different thread.

As such, I think a short-term fix for this “issue” is to set fee to 2bp.

2 Likes
  1. 100%
  2. 100%

2bps feels very low, leaves very little wiggle room for a maker rebate down the line.

  1. Yes, volume numbers would be harder to trust, but we can still look at open interest.
  2. I think 0 fees would only be for enough time to convince people to switch over. The number 0 is way more compelling than 0.02%.
  3. When fees are raised again, hopefully the people who switched over choose to stay because Mango really is a more compelling product. Where else can you earn interest on your collateral while you run an open source market maker and liquidator? I see going to zero fees as a way to incentivize people to try it out.

I think 0 take would definitely be temporary… Much like @daffy said, come for the 0 take, stay for the interest rate. Wash volume could be concerning, but I’m not entirely sure what the point would be, (unless you’re worried about that opening up some system overload attack vector). If anything, extra volume happens and it makes numbers look more attractive. MNGO can advertise as the platform that’s free to trade BTC futures on. That would be hugely attractive.

I think long term a move to something like -1(make)/5(take), with volume/mngo holding incentives makes sense, but grow the platform first.

I’m very skeptical of lowering fees to 0 as a last-ditch effort to attract traders when we don’t even have a somewhat compelling product for real traders yet. Why don’t we at least wait to see if this problem dissipates after we have stops, account data, more perps, etc.? We may be fixing a problem that doesn’t exist.

3 Likes

FTX had a lot of trading competitions in the very beginning. A general one and isolated ones for every new product they were listing (leveraged tokens, move contracts). I very much propose to reward 250k MNGO for a trading competition

I will enthusiastically support trading competitions once the product is better

4 Likes

What’s your minimum bar for this?

I know you mentioned stop loss, additional account data, more perps.

Is there other stuff specifically you want to see (this gives me motivation/ideas on what to work on)?

1 Like

I’d say the minimum bar is stop loss, account data, many more perps, no RPC issues / RPC caching implemented, and real liquidity within 20bps of mid for the perps. (I haven’t noticed RPC issues lately fwiw.) I think the market making is the hardest part. Right now, for example, you can’t sell any meaningful quantity of SOL-PERPS at a reasonable price.

As for other things that are above the minimum bar but that I would love to see:

  • An API service
  • Your work on dragging order lines
  • A complex risk calculator
  • A UI refactor to allow trading on any Serum spot market
  • A solid mobile and tablet experience
  • Export data for accounting

The idea that excites me most right now is a dedicated Mango Markets mobile app :slight_smile:

3 Likes

Is there any incentive for maximizing 30d avg trading volume like on CEXes?

This is a good idea from a marketing perspective, we’ve actually had this planned out with some prizes fwiw, If im not mistaken, I think the current hurdle is tracking? @daffy @mschneider can confirm there.

Reducing taker fees is a great idea to incentivize takers but the reason people are not trading on mango perps is because of the spread.
I think market makers should be incentivized with a negative fee, which should increase liquidity and attract takers.

Imo implementing @iwillnotsaveyou’s two buckets idea as well as -5bps maker fees would pretty much solve the MM incentivization problem. There should then be vol-based incentives to lower the taker fee from a standard 4-5 bps, which would cause net-negative DAO revenue from maker/taker fees (which is fine).

Looking forward to acting on this in the coming month or so - will knock heads and come up with a plan

1 Like