⚖️Fee Points

Definitions

Term	Definition
Fee Score	Dynamic score for each wallet based on recent paid fees (calculated for a given market)
Fee decay factor	The factor by which the fee score decays exponentially over time
Fee Point Share	Determines the share of the wallet from the total points allocated to the instrument within a small timeframe. It is calculated as the share of the wallet score from the total score of all wallets

The scoring mechanism defines a dynamic score that increases by recent paid fees and decays exponentially over time.

On a given market, the Fee Score and point share are calculated as follows :

$$\small\text{Fee Score}=\text{Previous Fee Score}*\\\exp(-\text{decay factor}~*~\text{time since last update})+\text{Paid fees since last update}$$

$$\small\text{Fee Point Share}=\frac{\text{Fee Score}}{\text{Total Fee Score of all Traders}}$$

Example

In Tier 1 pool, the fee score has a half-life of 30 minutes, i.e. a daily decay factor of 33.27 ($\exp(-33.27*\frac{30}{24*60})\approx50\%$)

• Decay Factor = 33.27 : i.e. In the absence of maker volume from wallets, the score decays by $\small\exp(-33.27*\text{number of hours} / 24)$ over time. This means that :

  • The score drops by $\small1-\exp(-33.27/(24*60))\approx2.28\%$ over 1 minute and

  • The score drops by $\small1-\exp(-33.27/24)\approx25\%$ over 1 hour

Time	Maker	Volume (USDC)
00:00:00	Alice	10
00:20:00	Bob	20
00:40:00	Alice	5
01:00:00	Charlie	15
02:00:00	Alice	5
03:00:00	Bob	8

The following chart shows the Point Share of each wallet over time. The point share is calculated at any point in time as the ratio between the wallet’s fee score and the total fee score of all eligible wallets.

Taking a further assumption that the Maker share for ETH-USD-PERP from the Tier 1 pool is a constant 50%, the total hourly number of points allocated to this market for the Maker program is :

• Total weekly allocation is 1’000’000 points. This is equivalent to an hourly allocation of 1’000’000 / (7 x 24) ~ 5’952.4 points

• 80% of this hourly allocation is available to Tier 1 pool, i.e. ~4’761.9 points

• 70% of the hourly Tier 1 allocation is available to the Tier 1 Fee program, i.e. ~3’333.3 points

• 50% of this hourly Tier 1 Fee allocation goes to ETH-USD-PERP, i.e. ~1’666.6 points

Therefore, 1’666.6 points is the total hourly number of points available to ETH-USD-PERP users for the Fee program.

From the Point Share which corresponds to the rate of accruing points, the cumulative points for each wallet (accumulated points since time 0) are derived.

Note that Alice earns 2 points between 0:00:00 and 2:00:00 since the point share of this wallet was 100% hence Alice earned 1 point per hour. After Bob’s trade and score increase, Alice point share dropped to ~30% which decrease the rate of earning points of Alice to 0.3 point per hour.

Note that Alice earns 555.5 points between 0:00:00 and 0:20:00 (i.e. at the rate of 1’666.6 per hour) since the point share of this wallet was 100%. After Bob’s trade and score increase, Alice points share dropped to ~36% which decrease the rate of earning points of Alice to 0.36 * 1’666.6 ~ 600 point per hour.

Below the total points distributed across wallets. Points are distributed at the rate of ~1’666.6 points per hour :