[WIP] Liquidity mining rewards


  • Reward early traders with part of the inflation rewards to attract more traders to the system
  • Distribute PERPs to the hand of users
  • Create a positive feedback loop for traders and stakers.
  • Prevent wash trading


  • Providing liquidity mining rebates for 1) trading fees 2) funding payment.
  • The Liquidity Mining program will test run for 4 weeks after the mainnet launches and see how it goes.
  • 50% of the inflationary rewards will be used for this Liquidity Mining program.

Reward Calculation Time

At the end of every week (Sun 00:00 UTC)

Off-Chain Process

  1. Perpetual Protocol aggregates all the trading fees and funding payment paid by each network participants of the given week into a spreadsheet
  2. Each network participant is rewarded USD-denominated value of PERP based on 100% of their aggregated trading fees and 50% of their aggregated funding payment.
    The USD price of PERP is TWAP of that week.
  3. The rewarded PERPs are capped by 50% of the inflation rewards that week. Once the rewarded PERPs > the cap, the rewarded PERPs will be proportionally distributed.
  4. 80% of the paid PERPs are locked on-chain for one year, and the rest 20% is claimable right away. The locked rewards would not be staked in Staking Pool.
  5. Perpetual Protocol pays each network participant by submitting an on-chain (or several) transactions.
  6. Upload the spreadsheet to IPFS for everyone who wants to verify it.


Alice pays $50 of trading fees to open a long position on Monday and also pays $20 of funding to shorts on the same day. At the end of the week, she would receive $60 of PERP to compensate her fees.
She could claim $12 of PERP right away, and the other $48 of PERP one year after.

Updates to the Funding Payment

  • 50% of the funding payment would be sent to Insurance Fund instead of the receivers of the funding payment. This is to prevent wash trading.

Pros and Cons

  • Pros
    • Traders earning PERPs → more fees → more Insurance Fund / more yield for stakers → more demand of PERPs → more traders earning PERPs
    • Perpetual Protocol is giving 100% taker rebates, and so it’s “free” for traders to trade, but it also disincentivizes wash activity because of USD-denominated value of PERP and one-year locked-up
    • Off-chain process that’s easy to update
  • Cons
    • Need a reliable TWAP price before it launches

Parameters Updatable by Governance

  • The ratio of liquidity mining
    • 50% of the total inflation rewards
  • The ratio of 1-year reward lockup
    • 80% will be locked-up for one year
    • 20% will be claimable after the epoch
  • The raito of PERP rewards
    • 100% of trading fees
    • 50% of funding payment

We’re also thinking maybe we should update the following to distribute the tokens faster:

  1. raising the ratio of claimable after the epoch. Ex: 20% -> 40%
  2. Increasing the transaction fee from 0.1% to 0.3% or more.
  3. Including the average gas fee in the rebate as well.

I think we should have parameters to set a distribution ratio per Pool (e.g. 25% ETH/USDT, 25% BTC/USDT, 50% LINK/USDT). Then we can boost trading on new listing where we want more volume.

I also think we should have a parameter per Pool to set distribution ratio for longs vs shorts. If there are too many longs in a pool, we can incentivise shorts.

We can start out with an even distribution between the pools and longs vs. shorts.

Maybe longs vs. shorts incentives are too complex to administer, because the market is so volatile.