# Trading Rewards

Traders on the Lyra Protocol earn rewards for opening and holding positions. The program is designed to reward traders who:

- Pay higher fees relative to premiums.
- Open shorter-dated positions, freeing up more liquidity in vaults.
- Hold a position until expiry, discouraging malicious sybil activity.

Each open position earns a daily score. A trader earns their share of a pool of rewards proportional to their total score at the end of each epoch.

Traders can also receive multipliers on their rewards by meeting certain conditions, such as staking LYRA, holding a top trader score for a day, or being referred by another trader.

Tier | Conditions | Multiplier |
---|---|---|

I | Unverified referrer | 1.1x |

II | 1k stkLYRA or top 100 or verified referred | 1.2x |

III | 10k stkLYRA or top 50 | 1.5x |

IV | 50k stkLYRA or top 25 | 2x |

V | 250k stkLYRA or top 10 | 2.5x |

Let:

- $F$be the amount of fees in a trade
- $P$be the premium of the trade
- $T$be the number of days to expiry of the option
- $L$be the number of days in the epoch
- $M_{daily}$be the daily multiplier
- $R_{total}$be the total rewards distributed for the epoch

Define the fee score

$F_{score}$

as:$F_{score} = 1 + \sqrt{\frac{F}{P}}$

Define the time score

$T_{score}$

as:$T_{score} = \max(1 - \frac{T}{L}, 0.2)$

Define a position's daily score

$P_{daily}$

as:$P_{daily} = \frac{F \times F_{score} \times T_{score}}{D}$

If a trader adjusts or closes their position, a time-weighted average of the daily position score is taken using the before and after

$F_{score}$

and $T_{score}$

.Define a user's daily score

$S_{daily}$

as:$S_{daily} = \sqrt{M_{daily} \times \sum\limits_{j=1}^{n} P_{score_{j}}}$

Define a user's total score

$S_{trader}$

as:$S_{trader} = \sum\limits_{i=1}^{D} S_{daily_{i}}$

A trader's rewards are proportional to their score relative to the sum of all

$k$

trader scores:$R_{trader} = \frac{S_{trader}}{\sum\limits_{k=1}^{m} S_{trader_{k}}} \times R_{total}$

- Trading rewards are calculated off-chain and distributed via reward distribution contracts.
- Rewards are distributed in fortnightly epochs.

Last modified 30d ago