MarketMaker Scoring
- The evaluation objective is to reward market makers who consistently provide tight and deep liquidity for users.
- Market makers earn points according to liquidity contribution, which means there is a score cap per block.
- The calculation is done off-chain based on on-chain blockchain data. The codebase is publicly available for any third-party verification.
- Market maker eligibility is decided by governance every month.
- Only registered market makers can earn incentives based on their scores. Market makers who fail to meet the uptime requirements are also given their month incentives.
- New applicants are requested to submit ApplyMarketMaker transaction to be included in the uptime evaluation. Those who meet the uptime requirement will be included in eligible market makers through governance.
- The governance can exclude existing market makers who fail to meet the requirements for 2 consecutive months or 3 months within the last 5 months.
- Orders satisfying following conditions can be recognized and evaluated:
- Use MMOrder from eligible MMAddress
Spread
equal or smaller thanMaxSpread
- Min(
AskWidth
,BidWidth
) equal or larger thanMinWidth
- Min(
AskDepth
,BidDepth
) equal or larger thanMinDepth
- Parameters (bottom of the document) are assigned differently for each pair depending on the market characteristics, and can be adjusted by governance
- Uptime requirement is measured in 2 stages:
LiveHour
is added as market maker provide valid orders for an hour. Following 1 out of 2 conditions, it fails:- No valid orders longer than
MaxDowntime
in a row - No valid orders longer than
MaxTotalDowntime
total in an hour
LiveDay
is added asLiveHour
is equal or larger thanMinHours
in a day
- Those who earn
LiveDay
equal or larger thanMinDays
satisfy the uptime requirement. - Parameters (bottom of the document) are decided and adjusted by governance.
- Following formula is used to compute how much incentives should be rewarded to each market maker per month. The amount of CRE earned is determined by the relative share of each market maker’s score.
- 1.First step (within a block)
- Calculate 2-sided liquidity point and take minimum value (take integer part)
-
- 2.Second step (within a block)
- Obtain contribution score by taking proportion of the point within the block
- 3.Third step (within a month)
- Calculate
Uptime
by dividingLiveHour
with total hours in a monthU = TotalLiveHour
/ Total hours in a month
- 4.Forth step (Final score)
- Final score of market maker ‘m’ is as following :
- : % of Market maker m’s
Uptime
in the month - : Total number of blocks for the month
- : Contribution score of market maker ‘m’ at block ‘t’
- All variables are used as final values after the trade is made.
- Even if the order of n-th tick is partially filled, the tick can still be a reference point(whether the highest bid or lowest ask) of measures when one of the following conditions is met. If not, the following tick becomes the reference point.
- Min(
AskQ(n)
,BidQ(n)
) is equal or larger thanMinOpenRatio
of the original order - Min(
AskQ(n)
,BidQ(n)
) is equal or larger thanMinOpenDepthRatio
ofMinDepth

Illustration of Bid/Ask
- Breadth
MidPrice
: Average price of lowest ask and highest bidSpread
: Price difference between lowest ask and highest bid divide byMidPrice
AskWidth
: Price difference between maximum and minimum ask divided byMidPrice
.BidWidth
is same with bid pricesAskD(n)
: Price difference betweenMidPrice
and n-th ask price divided byMidPrice
.BidD(n)
is same with bid prices
- Depth
AskQ(n)
,BidQ(n)
: The amount of token remaining in n-th tickAskDepth
,BidDepth
: Total amount of token remaining in ask or bid side

- Assume
MaxSpread
0.012,MinWidth
0.002,MinDepth
100,MinOpenRatio
0.5,MinOpenDepthRatio
0.1 - Measure
- Block 1
TextMarket Maker AMarket Maker BMidPrice9.945 = (9.96 + 9.93) / 29.945 = (9.97 + 9.92) / 2Spread0.00301659.. = (9.96 - 9.93) / 9.9450.00502765.. = (9.97 - 9.92) / 9.945AskWidth0.00301659.. = (9.99-9.96) / 9.9450.00201106.. = (9.99 - 9.97) / 9.945BidWidth0.00301659.. = (9.93-9.90) / 9.9450.00201106.. = (9.92 - 9.90) / 9.945AskD(1)0.00150829.. = (9.96-9.945) / 9.9450.00251382.. = (9.97 - 9.945) / 9.945AskD(2)0.00251382.. = (9.97-9.945) / 9.9450.00351935.. = (9.98 - 9.945) / 9.945AskD(3)0.00351935.. = (9.98-9.945) / 9.9450.00452488.. = (9.99 - 9.945) / 9.945AskD(4)0.00452488.. = (9.99-9.945) / 9.945-BidD(1)0.00150829.. = (9.945-9.93) / 9.9450.00251382.. = (9.945 - 9.92) / 9.945BidD(2)0.00251382.. = (9.945-9.92) / 9.9450.00351935.. = (9.945 - 9.91) / 9.945BidD(3)0.00351935.. = (9.945-9.91) / 9.9450.00452488.. = (9.945 - 9.90) / 9.945BidD(4)0.00452488.. = (9.945-9.90) / 9.945-AskDepth200225BidDepth160240AskQ(1)5075AskQ(2)5075AskQ(3)5075AskQ(4)50-BidQ(1)4080BidQ(2)4080BidQ(3)4080BidQ(4)40-- Block 2
TextMarket Maker AMarket Maker BMidPrice9.935 = (9.96 + 9.91) / 29.945 = (9.97 + 9.92) / 2Spread0.00503271.. = (9.96 - 9.91) / 9.9350.00502765.. = (9.97 - 9.92) / 9.945AskWidth0.00301962.. = (9.99-9.96) / 9.9350.00201106.. = (9.99 - 9.97) / 9.945BidWidth0.00100654.. = (9.91-9.90) / 9.9350.00201106.. = (9.92 - 9.90) / 9.945AskD(1)0.00251635.. = (9.96-9.935) / 9.9350.00251382.. = (9.97 - 9.945) / 9.945AskD(2)0.00352289.. = (9.97-9.935) / 9.9350.00351935.. = (9.98 - 9.945) / 9.945AskD(3)0.00452944.. = (9.98-9.935) / 9.9350.00452488.. = (9.99 - 9.945) / 9.945AskD(4)0.00553598.. = (9.99-9.935) / 9.935-BidD(1)0.00050327.. = (9.935-9.93) / 9.9350.00251382.. = (9.945 - 9.92) / 9.945BidD(2)0.00150981.. = (9.935-9.92) / 9.9350.00351935.. = (9.945 - 9.91) / 9.945BidD(3)0.00251635.. = (9.935-9.91) / 9.9350.00452488.. = (9.945 - 9.90) / 9.945BidD(4)0.00352289.. = (9.935-9.90) / 9.935-AskDepth190225BidDepth80180AskQ(1)4075AskQ(2)5075AskQ(3)5075AskQ(4)50-BidQ(1)020BidQ(2)580BidQ(3)4080BidQ(4)40-- In case of market maker A, the highest bid has moved from 9.93 to 9.91 at block 2.
BidQ(2)
does not meet the either conditions ofMinOpenRatio
of original order amount (5/40 < 0.5) norMinOpenDepthRatio
( 100(MinDepth
) * 0.1 = 10 ). - For market maker B’s case, reference point haven’t changed.
BidQ(1)
could not meet theMinOpenRatio
(20/80 < 50)condition, but larger thanMinOpenDepthRatio
.
- Liquidity Point
- Block 1
- Both market maker A and B meet the condition
Spread(A)
,Spread(B)
<MaxSpread
(0.012)AskWidth(A)
,BidWidth(A)
,AskWidth(B)
,BidWidth(B)
>MinWidth
(0.002)AskDepth(A)
,BidDepth(A)
,AskDepth(B)
,BidDepth(B)
>MinDepth
(100)
- Each point on Block 1 is as follows,
- Block 2
- Only Market maker B meet the condition,
Spread(A)
,Spread(B)
<MaxSpread
(0.012)AskWidth(A)
,AskWidth(B)
,BidWidth(B)
>MinWidth
(0.002)BidWidth(A) < MinWidth
AskDepth(A)
,AskDepth(B)
,BidDepth(B)
>MinDepth
(100)BidDepth(A) < MinDepth
- Contribution Score
- Block 1
- Block 2
- Final Score
- Sum up all of the contribution scores for the month and product cube of uptime
- Market maker A : (Assuming uptime 70%)
- Market maker B : (Assuming uptime 90%) :
Scoring module contains following parameters :
Key | Definition | Example |
---|---|---|
MinOpenRatio | Minimum ratio to maintain the tick order | 0.5 |
MinOpenDepthRatio | Minimum ratio of open amount to MinDepth | 0.1 |
MaxDowntime | Maximum allowable consecutive blocks of outage | 20 (blocks) |
MaxTotalDowntime | Maximum allowable sum of blocks in an hour | 100 (blocks) |
MinHours | Minimum value of LiveHour to achieve LiveDay | 16 |
MinDays | Minimum value of LiveDay to maintain MM eligibility | 22 |
Key | Definition | Example |
---|---|---|
PairId | Pair id of liquidity module | 20 |
UpdateTime | Time the pair variables start to be applied to the scoring system | 2022-12-01T00:00:00Z |
IncentiveWeight | Incentive weights for each pair | 0.1 |
MaxSpread | Maximum allowable spread between bid and ask | 0.006 (ETH-USDC pair), 0.012 (ATOM-USDC pair) |
MinWidth | Minimum allowable price difference of high and low on both side of orders | 0.001 (ETH-USDC pair), 0.002 (ATOM-USDC pair) |
MinDepth | Minimum allowable order depth on each side | 600000000000000000 (ETH-USDC pair), 100000000 (ATOM-USDC pair) |
Last modified 1mo ago