Adjacent to Orderly Network’s trading rewards, the market making rewards program is designed to incentivize market makers that play an integral role in the liquidity of the DeFi protocol. 10% of the total $ORDER token supply (100,000,000 $ORDER) is allocated to market makers who support the liquidity of the Orderly Network’s trading infrastructure.

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Epoch distribution

Market making rewards will be distributed linearly on an epoch basis over 200 epochs incorporating a Provide Liquidity-to-Earn model capped within each epoch performance.

500,000 $ORDER is allocated for each epoch for all qualified Orderly market makers. From epoch 7 onwards, the market maker rewards will be distributed as escrowed $ORDER instead of liquid $ORDER tokens in epochs 1-6. Any further adjustment of the distribution mechanism will be formally assessed and communicated to market makers in advance.

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Allocation Mechanism

For every epoch, market making rewards are allocated among Orderly’s listed markets. Each market’s allocation will be based on the following formulas:

PoolWeightmarket=PoolMultipliermarket∗activeDaysInEpochtotalEpochDaysPoolWeight_{market}=PoolMultiplier_{market}*\dfrac{activeDaysInEpoch}{totalEpochDays}

RewardPoolmarket=PoolWeightmarketTotalWeightRewardPool_{market}=\dfrac{PoolWeight_{market}}{TotalWeight}

  • The pool weight takes account of new listing/delisting of markets with the number of active days in an epoch, prorating the pool multiplier effect.

  • Each market’s pool multiplier will be maintained and periodically updated here by Orderly based on market conditions and other factors.

  • The amount of market making rewards allocated to each market is determined proportionally based on the ratio across the total weight against all markets.

TermDefinition
PoolWeightThe reward pool weightage of a market
PoolMultiplierThe amount of pool multiplier of a market
activeDaysInEpochThe number of days a market is active for trading in an epoch
totalEpochDaysTotal number of days in the epoch
TotalWeightThe sum of pool weights of every market
RewardPoolThe amount of rewards allocated to a specific market

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Distribution Formula

For each market, QfinalQ_{final} is calculated at the end of every epoch for eligible market makers and is determined by four main factors:

  1. Quality of Liquidity (Bid Depth and Spread from each market maker’s mid-market price),

  2. Liquidity Uptime

  3. Staked Balance ($ORDER/esORDER)

  4. Maker Volume

Market making performance is monitored and calculated on a minute-by-minute basis (using randomized sampling) and aggregated into a QminQ_{min} for each market. Orders below a certain minimum depth size and/or over a certain maximum spread from each market maker’s mid-market price will be excluded from the computation of QfinalQ_{final}. Refer here for the updated values.

Qfinal=∑N=1totalEpochMinutes{Qmin(N)=[BidDepth1Spread1+BidDepth2Spread2....,AskDepth1Spread1+AskDepth2Spread2...]}0.35∗[∑N=1totalEpochMinutesCount(Qmin(N)>0)totalEpochMinutes]5∗[max(10,stakedORDER)]0.15∗[MakerVolume]0.45 Q_{final}=\sum_{N=1}^{totalEpochMinutes} \{Q_{min(N)}=[\dfrac{BidDepth_1}{Spread_1}+\dfrac{BidDepth_2}{Spread_2}...., \dfrac{AskDepth_1}{Spread_1}+\dfrac{AskDepth_2}{Spread_2}...]\}^{0.35} *[\dfrac{\sum_{N=1}^{totalEpochMinutes}Count(Q_{min(N)}>0)}{totalEpochMinutes}]^5 * [max(10,stakedORDER)]^{0.15} * [MakerVolume]^{0.45}

rmarket=RewardPoolMarket∗QfinalQtotalr_{market} = RewardPool_{Market} * \dfrac{Q_{final}}{Q_{total}}

The amount of market making rewards a market maker earns from a market rmarketr_{market}, is proportional to their QfinalQ_{final} against the QtotalQ_{total} in that epoch.

rwallet=∑markets(rmarket)r_{wallet} = \sum^{markets} (r_{market})

The total rewards a market maker earns in an epoch is the sum of all the rewards per market. The rewards are consolidated across the multi-wallet linking and are only viewable/claimable by the designated rewards wallet.

TermDefinition
Qmin(N)Q_{min(N)}A MIN function of QbidQ_{bid} and QaskQ_{ask}, ensuring 2-sided liquidity is provided. Every market maker will have a QminQ_{min} for every minute in the epoch.
Qbid=[BidDepth1Spread1+BidDepth2Spread2...]Q_{bid}=[ \dfrac{BidDepth_1}{Spread_1}+\dfrac{BidDepth_2}{Spread_2}...]This component considers all the open orders placed by all the linked wallets.

Assume a market maker has multiple open bid orders in the BTCUSDC order book with the market maker having a mid-market price of $30,000. Given that the MinDepth is $5000 and MaxSpread is $200.
- 1 BTC at $29,900
- 5 BTC at $29,850
- 10 BTC at $29,500
Qbid=(1∗($29900$100/30000))+(5∗($29850$150/30000))Q_{bid}=(1*(\dfrac{\$29900}{\$100/30000}))+(5*(\dfrac{\$29850}{\$150/30000}))
*A sample is randomly taken once every minute
*Every order is viewed individually even if orders have the same order price
Qask=[AskDepth1Spread1+AskDepth2Spread2...]Q_{ask}=[ \dfrac{AskDepth_1}{Spread_1}+\dfrac{AskDepth_2}{Spread_2}...]This component considers all the open orders placed by all the linked wallets.

Assume a market maker has multiple open ask orders in the BTCUSDC order book with the market maker having a mid-market price of $30,000. Given that the MinDepth is $5000 and MaxSpread is $200.
- 0.01 BTC at $30,100
- 5 BTC at $30,150
- 10 BTC at $30,175
Qask=(5∗($30150$150/30000))+(10∗($30175$175/30000))Q_{ask}=(5*(\dfrac{\$30150}{\$150/30000}))+(10*(\dfrac{\$30175}{\$175/30000}))
*A sample is randomly taken once every minute
*Every order is viewed individually even if orders have the same order price
[∑N=1totalEpochMinutesCount(Qmin(N)>0)totalEpochMinutes][\dfrac {\sum_{N=1}^{totalEpochMinutes}Count(Q_{min(N)}>0)}{totalEpochMinutes}]This tracks the uptime of a market maker at a given minute. Count = 1 if the QminQ_{min} for a given in a minute is greater than 0.

This component measures and considers the total overlapped uptime of a market maker across the linked wallets.
max(10,stakedORDER)max(10,stakedORDER)stakedORDER refers to the average staked balance of a market maker.
- The average staked balance is calculated by the sum of the daily staked balance divided by the number of days in an epoch.
- For a market maker with multi-wallet linking, the individual linked wallet’s average stake balance will be summed into a single market maker’s average staked balance.
- A snapshot is randomly taken daily to determine the market maker’s daily staked balance.
Note that staking esORDER is equivalent to staking $ORDER.
Maker VolumeThe total maker volume the market maker has traded during the epoch.

This component considers all total maker volume done by all the linked wallets.
QtotalQ_{total}The sum of all QfinalQ_{final} by all eligible market makers of a market during the epoch.
rmarketr_{market}The amount of market making rewards earned by the market maker from a market in an epoch.
rwalletr_{wallet}The total market making rewards a market maker earns in an epoch across markets.
Market Making RewardsStaking