Blast Gold Liquidity Program

We're rewarding Blast Gold to traders providing liquidity

Update: Pacmoon (PAC) market now has 8x boost

75% of Blast Gold will be distributed to deposits and stakers in the BFX DMM Vault.

25% of Blast Gold will be distributed to traders placing orders in the orderbook. It’s an easy way to earn Blast Gold while contributing to the liquidity of BFX.

How it works

Here’s how you can get awarded the most Blast Gold as a trader:

  • Placing more orders in the orderbook (bids or asks)

  • Placing orders closer to the market price

  • Placing orders in actively traded markets

  • Orders once filled/canceled no longer earn Gold

The strategy to get the maximum gold is to place orders that are closer to the market price across multiple actively traded markets.

Motivation

Liquidity for an exchange is crucial for several reasons. Firstly, liquidity makes it easier for traders to execute trades quickly, efficiently, and at a fair price. This is because there is less slippage, which occurs when there is not enough liquidity in the market, causing orders to be filled at a different price than intended. In a highly liquid market, orders can be executed at or close to the current market price, which benefits traders by minimizing costs and maximizing profits.

Secondly, high levels of liquidity attract more traders to the exchange, which in turn attracts more liquidity and creates a virtuous cycle. This creates a network effect where traders are more likely to trade on a platform with high liquidity as it offers better trading opportunities and more choices in terms of trading pairs.

Finally, a highly liquid market promotes stability and security. In times of high volatility or market stress, liquidity helps to absorb sudden surges in demand or supply, preventing sharp price movements that could harm market stability. This, in turn, helps to build trust in the platform and increase confidence among traders.

Goal

The program's goal is to incentivize market liquidity based on three metrics:

  1. Size of orders placed

  2. Distance of orders to the market mid-price (bid price + ask price)/2

  3. Duration of orders placed

Program Details

Q_score measures the orders placed width, depth and maker volume for each given epoch.

Qscore=(QBid+QAsk)0.65MakerVolume0.35Q_{score} = (Q_{Bid}+Q_{Ask})^{0.65}MakerVolume^{0.35}

Calculation methodology

The following methodology calculates how much Gold rewards each trader receives per distribution epoch from the Liquidity Program. Each trader receives Gold proportionate to their Q_score. Orderbook snapshots are taken at random 1-minute intervals.

  1. Get the Q_Bid

Qbid=BidSize1(Spread1)+BidSize2(Spread2)+BidSize3(Spread3)...Q_{bid}=\frac{BidSize_1}{(Spread_1)}+\frac{BidSize_2}{(Spread_2)}+\frac{BidSize_3}{(Spread_3)}...

Assume a trader has multiple open bid orders (1 BTC at $59,995, 5 BTC at $59,960) on the BTC-USD order book and BTC is currently at $60,000 (based on mid price). A basis point is 0.01% = 0.0001.

QBID=1βˆ—59995/(5/60000)+5βˆ—59960/(40/60000)Q_{BID} = 1*59995/(5/60000) + 5*59960/(40/60000)
  1. Get the Q_ASK

Qask=AskSize1(Spread1)+AskSize2(Spread2)+AskSize3(Spread3)...Q_{ask}=\frac{AskSize_1}{(Spread_1)}+\frac{AskSize_2}{(Spread_2)}+\frac{AskSize_3}{(Spread_3)}...
  1. Sum Q_BID and Q_ASK for the given epoch


Last updated