Trading Rewards Mechanism

15% of the total $ORDER token supply (150,000,000 $ORDER) is allocated to users (excluding DMMs) trading on Orderly via any of Orderly’s builder frontends. The goal is to incentivize users who trade with Orderly Network while enjoying industry-leading order book liquidity.

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Epoch distribution

Trading rewards will be distributed on an epoch basis over 200 epochs incorporating a Trade-to-Earn model capped within each epoch performance. Rewards emitted have a reducing trend over time. Loyal and long-term traders stand to benefit the most. The estimated trading reward distribution is as follows:

There are two phases in the trading rewards structure:

1. Bootstrapping Phase (epoch 1-6): a fixed amount of $ORDER tokens will be distributed per epoch. This phase has the highest amount of rewards emitted per epoch.

2. Escrowed Phase (epoch 7 and onwards):

   • escrowed $ORDER will be distributed as rewards (i.e. esORDER) instead of $ORDER tokens

   • The actual rewards emitted per epoch may deviate from the estimated rewards emission schedule in this phase. Orderly will routinely assess if rewards are under/over-incentivizing and adjusted by increasing/decreasing actual epoch rewards.

The actual distribution schedule below also serves as a reference for the inflation rate of $ORDER attributed by trading rewards. Distribution of the escrowed phase will be pre-announced before the epoch commences in the future and updated in the table below.

Starting from epoch 7, we will distribute esORDER instead of $ORDER

Epoch	Epoch Rewards ($ORDER)	Accumulative Distribution
1	1,500,000	1,500,000
2	1,500,000	3,000,000
3	1,400,000	4,400,000
4	1,400,000	5,800,000
5	1,300,000	7,100,000
6	1,300,000	8,400,000

Epoch	Epoch Rewards (esORDER)	Accumulative Distribution
7	1,200,000	9,600,000
8	1,200,000	10,800,000
9	1,100,000	11,900,000
10	1,100,000	13,000,000

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Allocation Mechanism

For every epoch, trading rewards are allocated between two categories of symbols:

1. Major symbols (BTC, ETH, SOL) with X% weightage,

2. Alts symbols (all other symbols listed on Orderly) with (100-X)% weightage.

The symbols and weightage % associated with the two categories will be periodically adjusted here according to market conditions.

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Example

For a particular epoch with 1,000,000 $ORDER rewards, the major and alts symbols weightage are 40% and 60% respectively.

Major Symbols	40%
Alts Symbols	60%

Epoch Rewards	Major Symbol Allocation	Alts Symbol Allocation
1,000,000	400,000	600,000

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Distribution Formula

Trading rewards are distributed based on each user’s trading score during the epoch. The calculation of user trading scores adopts a two-layer approach:

1. The first layer proportionally allocates the total trading rewards to Orderly’s builders based on the total base fees generated by each builder to Orderly in each epoch (determined after each epoch has ended).

   • In this layer, trading rewards are “reserved” for the end users of each builder. Builders do not receive trading rewards from Orderly.

     • Market makers who provide liquidity directly via Orderly are eligible for market making rewards hence their accounts are excluded from this calculation.

   • Total base fees refer to the sum of fees generated to Orderly when trades are executed from the builder’s platform.

2. The second layer distributes the “reserved” trading rewards to each builder’s end user based on their individual total trading fees paid and average staked balance in each epoch (determined after each epoch has ended).

   • Trading rewards are distributed directly from Orderly to end users.

   • Total trading fees refer to the sum of trading fees paid by the builder’s end-users when they execute trades from the builder’s platform.

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Application of the First Layer

$R_{MajorBuilderX}= W_{Major} * R * {\frac {baseFees_{MajorBuilderX}} {baseFees_{Major}}}$

$R_{AltsBuilderX}= W_{Alts} * R * {\frac {baseFees_{AltsBuilderX}} {baseFees_{Alts}}}$

Term	Definition
$R_{MajorBuilderX}$ / $R_{AltsBuilderX}$	The total trading rewards amount allocated to a specific builder for the Major / Alts symbols category in an epoch
$W_{Major}$ / $W_{Alts}$	The weightage X% / (100-X)% of the Major / Alts symbol category
$R$	The epoch’s trading rewards amount
$baseFees_{MajorBuilderX}$ / $baseFees_{AltsBuilderX}$	The total amount of base fees generated to Orderly through a specific builder for trading Major / Alts symbols in an epoch
$basefees_{Major}$ / $baseFees_{Alts}$	The total amount of base fees generated to Orderly across all builders for trading Major / Alts symbols in an epoch

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Example

Assume that the epoch rewards is 1,000,000 $ORDER. The weightage of Major and Alts symbols are 40% and 60% respectively.

	Builder 1	Builder 2	Builder 3
Base Fees Generated (Major)	600,000	150,000	750,000
Ratio	80.00%	20.00%	100%
Trading Rewards, $R_{MajorBrokerX}$	320,000	80,000	400,000

	Builder 1	Builder 2	Builder 3
Base Fees Generated (Alts)	17,500	7,500	25,000
Ratio	70.00%	30.00%	100%
Trading Rewards, $R_{AltsBrokerX}$	420,000	180,000	600,000

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Application of the Second Layer

Within each builder, every end user gets a separate Trader Score for trading with Major and Alts for each epoch.

$TraderScore(w)_{MajorBuilderX}=feesPaid_{MajorBuilderX}^{0.85}*[max(10,stakedORDER)]^{0.15}$

$TraderScore(w)_{AltsBuilderX}=feesPaid_{AltsBuilderX}^{0.85}*[max(10,stakedORDER)]^{0.15}$

Trader scores are calculated at the end of each epoch and are determined by (1) the total trading fees the user has paid to the builder for trading Major / Alts symbols and (2) their average staked balance in each epoch.

• The average staked balance is calculated by the sum of the daily staked balance divided by the number of days in an epoch. A daily snapshot will be taken randomly to determine the user’s daily staked balance.

At the end of each epoch, trader scores are converted into trading rewards and distributed to end users.

$r_{MajorBuilderX}=R_{MajorBuilderX}* {\dfrac{w_{MajorBuilderX}} {allTraderScores_{MajorBuilderX}}}$

$r_{AltsBuilderX}=R_{AltsBuilderX}*{\dfrac{w_{AltsBuilderX}}{allTraderScores_{AltsBuilderX}}}$

The amount of trading rewards an end user earns is proportional to their TraderScore against the sum of all TraderScores within each builder in that epoch. The computation of major and alts symbols is calculated separately.

Term	Definition
$TraderScore(w)_{MajorBuilderX}$ / $TraderScore(w)_{MajorBuilderX}$	The trader score for trading Major / Alts symbols with a specific builder in an epoch
$feesPaid_{MajorBuilderX}$/ $feesPaid_{AltsBuilderX}$	The total amount of trading fees paid by the end user through a specific builder for trading Major / Alts symbols in an epoch
$stakedORDER$	The average staked ($ORDER/esORDER) balance of a wallet in an epoch
$r_{MajorBuilderX}$ / $r_{AltsBuilderX}$	The amount of trading reward an end user has earned under a specific builder for trading Major / Alts symbols in an epoch
$R_{MajorBuilderX}$ / $R_{AltsBuilderX}$	The total trading rewards amount allocated to a specific builder for the Major / Alts symbols category in an epoch
$allTraderScores_{MajorBuilderX}$ / $allTraderScores_{AltsBuilderX}$	The sum of all trader scores that traded Major / Alts symbols for a specific builder in an epoch