Chapter 3: Incentive Policies & Platform Services
3.1 Staking and Fee-Sharing
On OnlyDX, users who stake OLYDX directly share platform fee revenue and receive governance rights. Unlike models that rely heavily on high inflationary subsidies, we adopt real fee distribution + long-term lockup weighting. For example, GMX’s revenue-sharing structure (70% to LPs, 30% to stakers; cumulative distribution surpassing $450M [1]) demonstrates the sustainability of fee-back mechanisms. Building on this, OnlyDX emphasizes “long-termism”: long-lock users receive greater weight in governance and distributions, discouraging short-term speculation. Meanwhile, referencing staking-yield ranges on PoS ecosystems such as Cosmos (14%–22% [2]), we will dynamically tune incentive parameters to keep rewards attractive without letting excessive inflation erode token value.
3.2 Vault Services
OnlyDX Vaults provide a low-cost gateway to sophisticated strategies. Through auto-compounding, cross-chain batch execution, and multi-strategy allocation, Vaults deliver institutional-grade yield experiences to everyday users. Similar to Yearn’s yVaults (multi-strategy schedulers and auto-compounding [3]), OnlyDX Vaults will support stablecoin pools, cross-chain arbitrage pools, and privacy market-making pools. Against the backdrop of industry-wide Vault TVL expanding 28× in 12 months (from $150M to $4.4B [4]), we will leverage EIP-4844 to reduce L2 costs (by as much as 90% [5]), using on-chain batch execution to deliver significant gas savings and higher net yields.
3.3 Market Making and Trading Rewards
OnlyDX will launch a dual mechanism of “trade mining + liquidity quality scoring.” Genuine trading earns OLYDX incentives, while liquidity providers are scored by depth, price quality, and uptime. Rather than relying solely on volume, we combine on-chain signals to filter wash trading. Uniswap’s 24h volume often reaches ~$3.8B [6], illustrating how transparent data can support robust incentive allocation. For MEV, OnlyDX will implement a private mempool + in-protocol routing so that positive MEV flows back to users. Flashbots Protect has already safeguarded ~2.1M accounts, protected ~$43B in notional traded, and returned 313 ETH [7]; OnlyDX will extend this with a user-direct revenue-sharing mechanism so market makers and traders fairly share the upside.
3.4 Referrals and Ecosystem Contributions
OnlyDX’s referral program will tie rewards to actual traded volume and cap rates to avoid over-incentivization. CEX caps provide context: Binance and Bybit go up to 50% [9][10], while Kraken’s standard is 20% [11]. Our referral rates will be below CEX ceilings and fully settled on-chain for auditability. Beyond finance-centric actions, OnlyDX will reward ecosystem contributions via points—tutorials, translations, bug submissions, etc. Given that crypto security incidents totaled $572M in losses in 2024 Q2 [12], we will prioritize bounties and task rewards to strengthen a community-driven security loop.
3.5 Node and Watcher Incentives
Within OnlyDX’s layered privacy architecture, watcher nodes can submit fraud proofs against invalid states and earn rewards. Optimism enabled permissionless fault proofs in 2024 [13], validating this design. We will refine reward splits so challengers cover gas costs and receive net upside, ensuring incentives are sufficiently strong. OnlyDX will also introduce fast-exit liquidity services, where LPs pre-fund withdrawals to earn fees—akin to Across and Hop [14][15]. This keeps cross-chain and withdrawal UX smooth despite challenge periods.
3.6 Fee Backflow and Long-Termism
OnlyDX will implement a dual mechanism of partial fee burn + partial return to a governance pool to reinforce long-term token value. GMX has cumulatively distributed over $450M in fees to stakers [1]; we will borrow that transparent fee-back logic while adding long-lock weighting. Uniswap is fully transparent yet pays no distributions [6]. OnlyDX blends both: maintain fee transparency while routing a portion to long-term participants. Inspired by Solana’s Jito module distributing 3.75M+ SOL to validators [16], OnlyDX will convert protocol-captured MEV and cost savings into on-chain, auditable returns, strengthening long-term token appeal.
3.7 Comparison with Traditional CEXs
Unlike the “black box” incentive schemes common on CEXs, OnlyDX codifies transparent and permanent incentives in smart contracts—encouraging referrers, stakers, and developers to co-build the ecosystem. These mechanisms execute automatically on-chain to ensure fairness, verifiability, and long-run stability, breaking away from opaque CEX distributions.
Referrer incentives: Referrers earn a share of fees from users they onboard; new users receive fee discounts—lowering entry barriers and creating win–win dynamics. Example: User A refers User B; B trades $1,000,000 and pays $40,000 in fees (assuming a 4% rate). A earns a corresponding reward. This both attracts new users and motivates existing users to grow the network.
Staking incentives: Staking the OnlyDX token increases referral share, and grants governance rights and community dividends—similar to a shareholder model where larger stakes confer greater voice and higher yield.
Developer incentives: Developers can deploy custom contracts in the L2 EVM (bots, arbitrage, insurance, etc.). When users call these contracts, a portion of fees is automatically routed to the developer, enabling durable, usage-based income. For example, an arbitrage bot charging a 2% fee yields revenue on every invocation.
[1] DefiLlama: GMX Protocol Fees
[2] Kraken: ATOM Staking Yield
[5] Cointelegraph: Ethereum L2s Fees Decline Post-Dencun
[6] DefiLlama: Uniswap Protocol Fees
[7] Flashbots: 2M Protect Users
[9] Binance Blog: Referral Program Upgrade
[11] Kraken Referral
[13] Optimism Blog: Permissionless Fault Proofs
[14] Across Docs: Liquidity Provider
[15] Hop Docs
Last updated