XP & Referrals

Quote Quality Score

Quote Quality measures how valuable a liquidity provider’s (LP) orders are to the market. It rewards LPs who place orders close to the current market price and provide liquidity on both bid and ask sides.

XP Distribution (750,000 / week)

For the purposes of weekly XP distribution, we sum quote quality by user by market over the week and divide by total number of samples (~ every 1 minute). This gives us a single average quote quality metric we use for determining a users share of total exchange quote quality.

XP Distribution

  • 150,000 (20%) - Tier 1 Perps
  • 450,000 (60%) - Tier 2 Perps
  • 150,000 (20%) - Perp Options
Distribution subject to change and will be announced weekly along with XP

The Process

  1. Sample Collection: Quote Quality samples collected throughout the week
  2. Weekly Average: Sum all samples ÷ number of samples = your average Quote Quality
  3. Market Share: Your average ÷ total of all users’ averages = your share %
  4. XP Distribution: Your share % × weekly XP pool = your XP earned

Key Points

  • Consistency matters: Need to provide liquidity throughout the week, not just peak times
  • Quality beats quantity: Tight spreads earn more than large but wide orders
  • Tier separation: Each instrument tier has its own XP pool
  • Relative competition: Your rewards depend on your performance vs. other LPs

Bottom line: Weekly XP = Your sustained liquidity quality as a % of total market quality.

Key Concepts

TermDefinition
Quote QualityUSD value that tracks the overall quality of an LP’s liquidity provision over time using an exponential moving average of sample measurements
Sample Quote QualityA snapshot measurement taken every few seconds that evaluates current order quality
Order DepthHow far an order’s price is from the reference price (max(TOB, mid) for bids, min(TOB, mid) for asks), measured in basis points (bps).
Scaling factorA penalty system that reduces the value of orders placed farther from the reference price

Quote Quality Calculation

1

Measure Order Distance from Market

For each order, we calculate how far its price is from the current reference price:

Bid Order Depth=(max⁡(TOB,mid)−Bid Order Price)max⁡(TOB,mid)∗10,000\text{Bid Order Depth}=\frac{(\max(\text{TOB}, \text{mid}) - \text{Bid Order Price})}{\max(\text{TOB}, \text{mid})}*10,000Ask Order Depth=(Ask Order Price−min⁡(TOB,mid))min⁡(TOB,mid)∗10,000\text{Ask Order Depth}=\frac{(\text{Ask Order Price} - \min(\text{TOB}, \text{mid}))}{\min(\text{TOB}, \text{mid})}*10,000

Where:

  • TOB = Top-of-book price (best bid for bids, best ask for asks)
  • mid = Mid-market price (average of best bid and best ask)
2

Apply Distance Penalty

Orders farther from the reference price receive exponentially less weight. Each order’s adjusted value is calculated as:

Adjusted Order Size=Order Size ∗ exp⁡(−Scaling Factor ∗ Order Depth)\text{Adjusted Order Size}=\text{Order Size}~*~\exp\big(-\text{Scaling Factor}~*~\text{Order Depth}\big)

The scaling factors are instrument-specific and designed so orders at maximum spread receive only 1% weight. Orders beyond the Max Spread are completely excluded from calculations.

TermTier 1 PerpsTier 2 PerpsPerp Options
InstrumentsBTC, ETH, SOL PerpsAll other PerpsAll Perp Options
Max Spread
(Distance from Reference)		5 bps15 bps15 bps
Weight at Max Spread1.00%1.00%1.00%
Scaling Factor~0.92~0.31~0.31
Quote scaling functions are set by instrument and tier = Tier 1 Perps, Tier 2 Perps, Perp Options.
Quote scaling functions are set by instrument and tier = Tier 1 Perps, Tier 2 Perps, Perp Options.
Scaling Factor=−ln⁡(Weight at Max Spread)Max Spread\text{Scaling Factor} = -\frac{\ln(\text{Weight at Max Spread})}{\text{Max Spread}}
3

Sum Adjusted Orders by Side

We then sum all adjusted orders by side:

{Sample Bid Quality=∑Buy orders biAdj. Bid Order Size(bi)Sample Ask Quality=∑Sell orders siAdj. Ask Order Size(si)\begin{cases} \text{Sample Bid Quality} = \sum_{\text{Buy orders } b_i} \text{Adj. Bid Order Size}(b_i) \\ \text{Sample Ask Quality} = \sum_{\text{Sell orders } s_i} \text{Adj. Ask Order Size}(s_i) \end{cases}
4

Calculate Sample Quote Quality

The system heavily rewards two-sided market making by putting a 70% weight on the minimum of bid and ask sample quality:

{Sample Quote Quality=70%×min⁡(Sample Bid Quality,Sample Ask Quality)+30%×max⁡(Sample Bid Quality,Sample Ask Quality)\begin{equation*} \begin{cases} \text{Sample Quote Quality} = \\ 70\% \times \min(\text{Sample Bid Quality}, \text{Sample Ask Quality}) + \\ 30\% \times \max(\text{Sample Bid Quality}, \text{Sample Ask Quality}) \end{cases} \end{equation*}

Why 70% weight on minimum?
This incentivizes providing liquidity on both sides rather than just one side of the market.

5

Calculate Moving Average

The final Quote Quality smooths out short-term fluctuations using a 20% weight on new measurements:

Quote Quality(ti+1)=20%∗Sample Quote Quality(ti+1)+80%∗Quote Quality(ti)\text{Quote Quality}(t_{i+1})=20\%*\text{Sample Quote Quality}(t_{i+1})+80\%*\text{Quote Quality}(t_{i})