Market Makers
Market-making activity will receive 20% of the total allocated points (50,000). Only premium accounts are eligible to earn points from market-making.
LLP
LLP will be considered a market maker, following the same rules. However, the points earned by LLP will not be allocated to it. Instead, all final points will be scaled so that the total remains 250,000 points. This effectively treats LLP as a market participant without directly returning points to LLP holders. In this way, if a market is dominated by LLP, most of the points will go to LLP and will then be effectively redistributed among all platform participants.
Points for Volume
For each week, we’ll be looking at the total maker volume generated by premium accounts. Each user will receive a volume score, which will be equal to
Points will be distributed proportionally to this score. The score is calculated once for the entire week, not daily, meaning that $1 in volume on the first day has the same impact as $1 on the last day. The formula adds a 25% bonus to any weekly volume above 2.5B. All markets are weighted equally.
Points for providing liquidity
Background
We recognize that providing strong liquidity with tight spreads on BTC can generate significant trading volume, and this will, to some extent, already be reflected in the volume-based rewards.
However, providing $10M in liquidity on BTC at 2–3 bps might not produce the same volume, and the benefit of 2–3 bps of better execution must be weighted against the risk of posting that liquidity.
With this in mind, we aim to incentivize market makers to provide high-quality liquidity even when it does not result in large trading volumes, ensuring that traders can execute sizable positions when needed.
Another aspect concerns altcoins that currently lack traction on Lighter or have higher volumes on other exchanges. Traders may avoid these markets due to limited liquidity, while MMs may skip them because of low volume. To address this, we will assign a higher weight to such markets.
Market weights
Each market will be given a weight that accounts for both liquidity demand and associated risk.
For a selection of exchanges, we will approximate two multipliers that track how the volume and open interest on those exchanges compare to Lighter. We will then adjust the external volumes and open interest based on these multipliers. Using the adjusted values together with Lighter’s own data, we will determine the final market weight.
Note: this approach shifts weight toward tokens that are heavily traded (e.g., BTC, ETH, SOL) and also assigns higher weight to tokens that are popular on other exchanges but not yet on Lighter, while maintaining balanced weights for tokens that show stronger activity on Lighter itself.
Note: weights are recomputed hourly.
Methodology
We will sample the order book at random intervals, and users will receive points proportional to the share of liquidity they provide. At each sample, we will evaluate several metrics, such as:
who is providing liquidity within the top $10k, $30k, $100k, $300k, …
who is providing liquidity within 1 bps, 2 bps, 5 bps, 10 bps of mid-price
These thresholds will depend on the market — for example, $10k in liquidity on BTC is relatively small, while $50M on YZY would be unrealistically high. For each market, we will use approximately 6–10 of these metrics, each carrying the same weight.
Note: these metrics will be computed separately for the bid and ask sides.
Volatility
For each order book snapshot, we will compute a volatility score, which acts as a multiplier when providing liquidity. This is meant to incentivise market makers to provide liquidity even during volatile periods.
Without the volatility multiplier, each order book sample would carry the same weight. Because the multiplier makes some snapshots contribute more than others, we will calculate the total score on a daily basis. To prevent a single trading day from dominating the results (for example, accounting for 90% of all points), we will implement a ceiling mechanism that ensures each day receives at least 8.33% of the total points for liquidity provision.
For example, if one day in the week experiences very high volatility for 20 hours, the points for that day would be capped at 50% of the total pool. This scenario is unlikely, as we assume such volatility would last for only part of a single day, with the remaining six days being normal.
Example
You are a market maker who specialises in providing high-quality liquidity on BTC, offering $1M at once but only on one side of the order book.
If we were to allocate 1,000 points weekly for BTC liquidity provision, and the BTC metrics were as follows:
top $300k, $1M, $3M, $10M, $30M
top 0.5 bps, 1 bps, 2 bps, 4 bps, 10 bps
Assuming you provide 100% of the top $1M in liquidity, you could expect to receive:
50 points for top $300k category
50 points for top $1M category
16.6 points for top $3M category
5 points for top $10M category
1.66 points for top $30M category
For the bps categories, the same logic applies; the actual points depend on how much liquidity exists at those levels.
Note: You would receive only 50 points for the top $300k category because we assume you quote on one side at a time. These numbers are purely illustrative; the actual parameters used in calculating these metrics may differ.
Notes
Depending on the market conditions, data availability, and team discretion, some constants might change.
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