Dynamic Mining Reward

In Derify protocol, rewards for position mining is influenced by risk ratio VratioV_{ratio}.

As described in Position Mining, assuming that at a given clearing moment for a certain derivative, its total position mining rewards are WW, current position held is pp and position pool is PP, then base position mining rewards ww are calculated as follows:

w=WpPc=WpXcYcw=W*\dfrac{|p|}{P_c}=W*\dfrac{|p|}{X_c-Y_c}

Taking into consideration of the influence from VratioV_{ratio}, the adjusted rewards wdynamicw_{dynamic} are calculated as follows:

wdynamic={w(1+μXc+YcXcYc),p>0w(1μXc+YcXcYc),p<0w_{dynamic}=\begin{cases} w*\Big(1+\mu*\dfrac{X_c+Y_c}{X_c-Y_c}\Big),&p>0\\ \\ w*\Big(1-\mu*\dfrac{X_c+Y_c}{X_c-Y_c}\Big),&p<0 \end{cases}
  • pp is positive if the position held is long, or negative if short.

Mining rewards coefficient μ\mu is a pre-set constant determining the sensitivity of DMR. The larger μ\mu, the more rewards for those positions that are opposite to the naked position.

Mining rewards coefficient μ\mu is a changeable constant and can be adjusted via DAO community voting.

Dynamic Mining Reward (DMR) is a complement for PCF. PCF is an one-off reward for all position changes that reduced naked position, while DMR is a constant influence (through its changes and adjustments) for all position held against the naked position.