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loyalty.md

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Loyalty Program

Overview

The Loyalty Program rewards active users with discounts on trading fees. Users can be assigned different loyalty levels, each providing a specific discount percentage on protocol fees. This encourages user engagement and provides benefits to regular traders.

User loyalty levels are fully determined by the protocol governance (admin). The system is designed to be centrally managed to ensure fair and strategic distribution of loyalty benefits.

Fee Calculation

When a user places an order, the system calculates their total discount rate:

// Ensures total discount doesn't exceed 100%
total_discount_rate = min(
    deep_fee_coverage_discount_rate + loyalty_discount_rate,
    100%
)

Where:

  • deep_fee_coverage_discount_rate: Based on how much DEEP the user provides vs. takes from reserves
  • loyalty_discount_rate: The user's loyalty level discount

Administration

Management of the loyalty program is split into two categories to balance security with operational efficiency.

Protocol-Level Management (Multisig Required)

Core changes to the loyalty program structure require multisig approval to ensure they are secure and deliberate. These actions include:

  • Creating new loyalty levels (add_loyalty_level)
  • Removing existing loyalty levels (remove_loyalty_level)
  • Assigning LoyaltyAdminCap to a new owner

User-Level Management (Delegated)

Assigning or revoking loyalty levels for individual users is a frequent task. To streamline this, these actions can be performed by the owner of the LoyaltyAdminCap without multisig approval.

  • Granting a level to a user (grant_user_level)
  • Revoking a level from a user (revoke_user_level)

Integration with Trading

The loyalty program integrates with the trading system in several places:

Order Creation

When creating orders, the system:

  1. Gets the user's loyalty discount rate
  2. Combines it with the DEEP fee coverage discount
  3. Applies the total discount to protocol fees

Fee Estimation

The system estimates fees including loyalty discounts by:

  • Combining loyalty discount with DEEP coverage discount
  • Ensuring total discount doesn't exceed 100%
  • Applying discount to protocol fees

Key Rules

  • Users can only have one loyalty level at a time
  • Levels cannot be removed if they have members
  • Creating or removing loyalty levels requires multisig approval
  • Granting or revoking user levels can be done by a designated Loyalty Admin