Hello All,
Wanted to highlight some resources and data behind the Maker Incentives portion of this proposal and discuss some of the efforts we are taking to support the growth of this aspect of Rubicon’s ecosystem.
For the past year we, the Rubicon Team, have acted as the primary market makers on the protocol, leading to over $48M in volume to date. Now, we turn our focus to onboarding the next 1000+ Market Makers to the protocol, providing equal access to all level of actors in a fair, transparent, and trust-less fashion.
In support of this goal we have open-sourced:
- Custom Contracts: to support more advanced trading strategies on the protocol
- Developer SDKs: to empower developers, we have built and support both Python and Rust SDKs, with plans to support more languages in the future
- Public Subgraphs: to provide historical data access, we have built and support a variety of open-source subgraphs for the protocol
In addition to the above tooling, we are actively working to open-source market making bots and trading infrastructure to enable users to quickly start making markets in an automated fashion. To continue supporting the growth of Rubicon, and Optimism’s, Maker Community, we are requesting a grant to incentive “maker volume” (volume created by offering liquidity on the platform) and drive active participation by new and existing market makers.
Active Market Makers are power users of both the Rubicon Protocol and Optimism. Accounting for all addresses that have provided liquidity on the books (makers), the average transaction count per maker is ~1000. When filtering for addresses that have made over 100 offers on the protocol (automated traders and power users) this average jumps to ~37K transactions per maker.
Maker Incentives are intended to focus growth through the following lenses:
- Reach: Any DeFi user can earn these rewards, it’s as simple as placing limit orders on the App or calling the offer() function on the smart contract. Offering liquidity on the Rubicon Protocol is free, outside of gas, for every user. With zero fees, a limit order allows a user to decide a direction, size, and price for their trade, while benefitting from the low transaction fees on Optimism. For comparison, CEXs such as Coinbase implement maker fee tiers, with small-volume users (<$10K volume) paying a 40bps fee while only large-volume users (>$250M) qualify for zero fees. We are excited to help users of all levels start providing liquidity on the books, and can help with onboarding in our discord.
- Users: Maker Incentives most directly benefit power users and developers through a reward structure that allocates OP proportional to the relative volume made by a user. In a competitive environment, we expect that top performing makers will be those who are able to build and maintain sophisticated trading systems on top of the protocol. Sophisticated traders benefit not only Rubicon, but every DEX on Optimism.
- Likelihood of Success: As outlined in the proposal above, we are excited take our learnings and successes from the Phase 0 grant and pursue even greater returns on public investment when it comes to key growth metrics. Gas fees serve as the number one cost of market makers on the protocol. With huge technical advancements on the horizon, namely Bedrock and 4844, we expect that in the very near term these barriers to entry (gas costs) will rapidly fall. Maker Incentives are intended to help onboard users ahead of these advancements, and will help to subsidize operational costs. Onboarding users and helping them iterate towards profitable market making strategies, in todays relatively high gas cost environment, will prepare them to excel in the months and years to come.
After every epoch of the maker rewards, with guidance from the grants committee and Optimism Community at large, the program may be paused to correct course and ensure further growth of key KPIs. We are continuously striving to subtract our influence in order to enable, and promote, effective decision making from the collective.
Thanks for your time, may we all build the future we know is possible together, and stay Optimistic about what is to come.
Best,
denver