Product Feature

Liquidity Mining

DeGate liquidity mining aims to incentivize users that provide effective liquidity to the order book. Effective liquidity refers to orders from grid strategies that are positioned around the order book's buy 1 (highest buying price) and sell 1 (lowest selling price).

Mining Pool

Liquidity mining is done with trading pairs. A mining pool refers to a trading pair that is currently available for mining or about to be ready for mining. The node operator is responsible for setting up the mining pool. Users can find information about the mining pool on the mining interface. A mining pool lifetime may be divided into multiple phases where the phase period and reward amount can be different across phases.

How to do Mining?

The following conditions must be fulfilled to participate in the mining:
  1. 1.
    Order Requirement: Only orders from a grid strategy can participate in mining. Mining is not applicable for regular orders.
  2. 2.
    Funding Requirement: At the time when the grid strategy is created, if the grid order value fulfills the mining requirement (higher than the minimum order size), the funding requirement will be met. Each grid order will be assessed independently and users can check which grid order has fulfilled the requirement during grid strategy creation. The fulfillment of the funding requirement is determined at the time when the grid strategy is created. This implies that after a grid strategy is created, the eligibility will not change – grid orders that have fulfilled the funding requirement will be eligible, and grid orders that do not meet the requirement will not be eligible even with the movement of trading prices.
  3. 3.
    Price Requirement: To encourage effective liquidity in DeGate, the DeGate protocol makes an assessment every 15 seconds. For grid orders that met conditions 1 and 2, mining rewards are earned if the order price is within the reward price range.
It can be seen that conditions 1 and 2 are static which is determined at the time when the grid strategy is created. Condition 3, on the other hand, is dynamic which implies that not all grid orders are guaranteed to receive mining rewards. Comparing different grid strategies that have the same value of initial allocation, the awardable mining reward can be different if the price range and the number of grids are different.
In addition to the abovementioned conditions, if the creation time of a grid strategy is earlier than the start time of the mining pool, the grid strategy will automatically qualify to participate in the mining once the mining pool is active. Users do not need to cancel and recreate their grid strategies.

Reward Price Range

The reward price range moves dynamically in real-time according to the changes in the order book and is dependent on the trading pair type. The rules are as follows:
  1. 1.
    Regular Trading Pair: The order book's highest buy price * 0.99 ~ lowest sell price * 1.01
  2. 2.
    Stable Type Trading Pair: The order book's highest buy price ~ lowest sell price
The reward price range of stablecoin trading pairs such as USDT/USDC is more stringent as they have less price fluctuation.

Reward Calculation and Allocation

The calculation is performed every 15 seconds. For every mining pool, the 15 seconds reward is divided across all the grid orders that fulfilled the mining condition and proportionate to the order values. Users will have to claim the allocated reward in their account.

Example of Reward Calculation

  1. 1.
    Your ETH/USD grid strategy has fulfilled the funding requirement during its creation.
  2. 2.
    Assume that at some point in time, the highest buying order is $1495, and the lowest selling order is $1502. Hence, the reward price range is between $1480.05 to $1517.02. One of your grid orders is selling at $1510, which is within the reward price range, meaning that your grid strategy is eligible to participate in the liquidity mining as the order has fulfilled the mining price requirement.
  3. 3.
    The order value is computed accordingly to the ETH risk price as 1*$1495=$1495.
  4. 4.
    The total value of the ETH/USDC grid orders that have fulfilled the mining requirement is $42,391.
  5. 5.
    The allocated mining reward during these 15 seconds is 10 DG.
  6. 6.
    Therefore, the reward that you will receive is 1495/42391*10=0.35266919 DG.

Grid Strategy Running Time

To prevent users from canceling and creating grid strategies repeatedly to earn mining rewards, a requirement relating to the grid strategy running time is in place. Rewards that are allocated before the required minimum grid strategy run time remain in the "Not Claimable" status which will be updated to "Claimable" when the minimum run time is met. If the user cancels the grid strategy before the minimum running time, the user will lose all the "Not Claimable" rewards and the reward will return to the mining pool.
If a user wishes to participate in a mining activity, the user needs to ensure that the grid strategy is created at a specific time earlier than the end time of the mining pool. This is related to the required minimum grid strategy running duration.
For example, the mining pool end time is 10 pm on 30 October 2022. Since the minimum grid strategy running time is 12 hours, the user has to create the grid strategy before 10 am on 30 October 2020 to participate in the mining.

Claiming Mining Reward

Users can claim their "Claimable" portion of mining rewards at any time. A gas fee is required for each claim and the reward will be credited to the DeGate account instantly via the transfer method

Mining Statistics

Each user will be able to view their personal mining statistics such as the latest value of invested funds, recent profits, and which grid strategies are undergoing mining. By clicking on the grid strategy, users can see more detailed mining data such as mining return of investments and reward source, etc.

Project Collaboration

DeGate liquidity mining program supports the distribution of rewards in different tokens. Projects are welcome to collaborate and customize the mining pool.