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Trading Rewards
Earn up to 100% APR on the trading fees alone
The trading rewards program is designed with a clear objective of:
- 1.Incentivizing all traders to use Polysynth protocol
- 2.Accelerate market liquidity and overall product usage
POL will be distributed on a weekly epoch basis. The amount of POL distributed to traders is based on a formula that rewards a combination of fees paid, open interest and staking ratio. Traders earn up to 100% APR on their trading fees alone.
These trading rewards can be claimed and staked to earn 100% + APY via auto-compounding staking strategy, which is the primary value accrual strategy of Polysynth DAO.
Working Mechanism
The Cobb-Douglas function is used to compute how much POL is awarded to each trader during each epoch.
Rewards, r is equal to
Where S is equal to
and w is equal to
Here,
Terms used in the working mechanism of trading rewards
Trading rewards are capped at 700,000 POL per 7-day epoch. It can be increased in the early days of protocol adoption to incentivize traders and can be decreased later to limit inflation. The community can decide on that via a governance proposal. We believe in giving power to the community to do what's best for them.
The following example illustrates trading rewards earned by traders Alice, Bob and Harry using the formula listed above:
An example of how trading rewards work
Note: In the above example POL-USDC price is assumed to be 1. POL-USDC price will be the latest oracle price. Pre-IEO, this will be equivalent to the latest sale price.
Trading Rewards FAQs
Who is eligible for trading rewards?
All traders on the Polysynth Protocol are eligible for receiving POL as trading rewards.
The Polysynth Protocol is not available to traders in the United States or Restricted Territories, as defined in Polysynth’s terms of service.
When will I receive my trading rewards?
Trading rewards are computed and paid out weekly every Monday at 00:00 UTC timestamp. However, there is a 90-day lock-up period followed by a 90-day release period having a daily vesting schedule. Post-lock-up period, your vested rewards will be auto-staked and will earn staking rewards.
How much POL did I earn in trading rewards?
How do I claim my trading rewards? When can I withdraw and transfer my earned POL?
All rewards have a 90-day lock-up and thereafter, a daily release schedule over another 90 days. Your rewards will be auto-staked post-release and can be claimed, transferred to your wallet and/or used for governance.
Why is my reward less than from as compared to the formula?
Total trading rewards are capped at 700,000 POL per 7-day epoch. As such, if total rewards across all traders for the epoch is more than 700,000, everyone’s reward is scaled pro-rata such that the total rewards remain capped at 700,000 POL per epoch.
What is open interest?
Open interest is the USD value of all outstanding long or short positions for a given market. Increasing open interest represents new or additional money coming into the market while decreasing open interest indicates money flowing out of the market.
Below is a table indicating the trading activities of Alice, Bob. Open interest is calculated in USDC terms following the trading activity for each day.
Time
Trading Activity
Open Interest (USD)
Day 1
Alice buys 1 BTC at $30,000
$30,000
Day 2
Bob buys 5 BTC at $30,000
$180,000
Day 3
Alice sells 1 BTC at $30,000
$150,000
Day 4
Bob sells 5 BTC at $30,000
$0
A trader's open interest is the USD value of all of that trader's open positions. For trading rewards, a trader's open interest is measured every minute (at a random time in each minute) across all markets and averaged across a given epoch.
Last modified 1mo ago
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