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@raho
Just dropped an analysis with @tnorm on the impact of @PolynomialFi's OP incentive program that ultimately led to the protocol's cumulative trading volume surpassing $3.8B 🧵
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Key takeaways: • Incentives can drive short-term spikes in usage; however, tapering and strict vesting could sustain activity further • Wash trading remains an issue in trading incentive programs • Incentives led to a 23x surge in trading volume but only doubled daily traders
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OP trading rewards on Synthetix, Kwenta, and Polynomial drove massive increases in usage metrics on the protocols.
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We saw incentives lead to a 23x surge in volume but only a 2x in daily traders, indicating a massive increase in the presence of either power users or wash trading.
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Incentives proved highly effective for Polynomial, but optimizing for actual usage is key. Creating an environment ripe for wash trading risks generates inorganic trading volume and has proved unsustainable. https://twitter.com/hildobby_/status/1603763322012041217
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Looking ahead, while a powerful way to drive growth, incentives require thoughtfulness to build sustainable ecosystems, not just short-term spikes. Future programs should optimize to balance growth incentives while discouraging exploitation.
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Observing Polynomial's retention after incentives end will reveal the program's sustainability, but with intelligent design, programs can catalyze organic growth for emerging protocols.
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Check out our full post on the forum here: https://gov.optimism.io/t/incentive-impact-analysis-polynomial/6796
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