INCREASING INCENTIVES for SHORT Positions

Wanted to check how do you feel about the proposal to adjust MIR rewards coefficients to rewards a bigger portion of MIR rewards to short side comparing to long side.

Currently the premiums on many pairs are in the range of 6-7%. At the same time MIR incentive almost the same for both short (~35%) and long slide (~28%) that encourage market neutral and discourage more short minting.

The idea is to double-triple short MIR incentive while decrease long MIR incentive for respective pairs.

Let me know how do you feel about this proposal. If there is enough interest I can spend more time calculating specific changes in coefficients and provide a formal proposal for voting.

Would love to hear if anyone is against or for the proposal!

4 Likes

I think premium exist because people do not create new short positions, but instead hold their short positions for a long period of time without taking any action.

Even if we increase reward ratio for Short positions larger than the long positions, if people just create one short position and hold them for a long time, it would really help the reduction of premiums.

2 Likes

i think you are right. I guess my hope is that by increasing rewards we will attract more capital to open more short positions. when APR goes form 30% to 100% I think more and more capital will be involved in arbitrage. with current rewards opportunities elsewhere are higher…

I like the idea. Shorting is riskier and it should be encouraged to improve the liquidity and trading activities.

2 Likes

I agree. But i think this should be done dynamically with addressing premiums as the main priority. So high premium assets should have less rewards for longs (0%) and more rewards for shorts. This can br implemented dynamically. For example rewards can have a 0% weighting if premiums are above 5%, .1 weighting if 2-3% and 0.5 weighting if 0-2% premiumz

agree 100%. will try to draft something on that front. not sure who will implement though as team seems to be quiet these days