Five Kinds of Users on LeverjAt Leverj we are not just building a trading platform, we are building a comprehensive ecosystem that ties in stakeholders of all sorts of varying interests. In order for this decentralized system to function, the incentives must be aligned between these stakeholder which hold together a stable, steady state equilibrium.
Below we describe 5 unique stakeholder types in Leverj ecosystem. They have different incentives which bring them into the system and they play special roles that keep it all in balance.
1. Professional trader/LEV stakerThe standard use-case of Leverj is for traders who are actively trading ERC20/ETH spot markets and ETH/USD futures. This type of trader will incur significant trading fees that would be partly covered by buying LEV and staking to receive FEE tokens. This active LEV staking provides an avenue for FEE generated to be distributed by trading volume.
Say Billy is an active trader on Leverj. His trading activity is high, so he has purchased LEV tokens to stake. The FEE tokens he generates will be sent to his Leverj account which will cover some of his trading fee activities. For the remaining trading fees which are not covered by the FEE disbursements from his staked LEV, he is automatically buying FEE from the FEE/ETH orderbook, which typically will trade below its face value of 0.0001 ETH per FEE. He has elected to buy FEE automatically from an option in his account settings. This provides a flow of demand for FEE from the ETH used in his account.
Benefits to ecosystem: staking LEV, receiving FEE, trading on Leverj, demand for FEE to pay trading fees.2. FEE ArbitrageurThe major feature of Leverj’s bi-token system is having the stable secondary token, held together by the primary PSM (see whitepaper for more details). The FEE token is accepted by Leverj to pay for trading fees at a fixed ETH rate, which means traders who have fees to pay will demand FEE on the FEE/ETH market as long as it is below the face value (0.0001ETH/FEE, as is its fixed value when paying fees.)
However, the market can be chaotic and illiquid at times, and there may be temporary price dislocations, where FEE orderbook price becomes significantly discounted. This will trigger secondary systemic PSMs that help alter the supply increases of FEE. Additionally, if the primary and secondary systemic PSMs are ineffective, then ad hoc PSM may be executed to provide market balance and bring the market closer to the target range.
Smart traders may detect patterns in how market price moves in relation to the PSMs, and can earn money using ETH to buy FEE at a lower price and sell at higher prices. This speculation is not without risk, but the incentive is there for traders to help bring price back to equilibrium.
Benefits to ecosystem: buying FEE low, selling FEE higher to ETH traders, providing FEE liquidity.
3. Passive licensee/LEV stakerAnother set of users in Leverj may just buy LEV and stake in order to receive FEE for the sole purpose of selling into ETH. This user may be Dillon, an infrequent trader who as of late, has not been trading at all. Thus, he is generating FEE solely to sell into the market.
While the Dillon type of user is mostly “extractive,” in that they are not interacting with the Leverj trading platform and are only buying LEV for the purpose of liquidating FEE coupons for ETH, we do expect that a number of people will choose to do this.
Benefits to ecosystem: staking LEV, receiving FEE, selling FEE for ETH to traders on Leverj to buy at discount.4. The Casual TraderSome traders will use Leverj as an Ethereum platform without being directly involved with FEE/ETH markets or LEV token staking. Take Carl, who found himself on Leverj when he heard he could trade ETH/USD futures.
Since Leverj charges fees in ETH as the spot markets are for ERC20 tokens denominated in ETH and the derivatives will require Ether as collateral, there will be no need for traders like Carl to actually use LEV or FEE directly. The platform will be able to perform the discounted FEE demand completely behind the scenes.
In this example, Carl deposits 10 ETH to Leverj and wants to use it to do some leveraged trading. He owns no LEV, he stakes no LEV, and he is not interested in speculating in the FEE/ETH orderbook. However, if the FEE/ETH orderbook on Leverj is trading at 0.00008, significantly below the 0.0001 rate that the platform accepts FEE at, then he will likely want to take part in this fee discount. Carl simply elects to automate this process from a checkbox in his settings, and Leverj automatically takes the amount of Carl’s ETH needed to cover his current trading fees and buy at the discounted price on the orderbook. This way, Carl needs not divert his focus from his trades by taking any special actions, but he can still partake in the benefits of lessening the amount of ETH he would be spending on fees.
Carl is then, unbeknownst to him, providing demand for FEE tokens on the FEE/ETH orderbook behind the scenes while he is trading with his Ether.
Benefits to the ecosystem: generates trading volume on Leverj (which creates FEE tokens), provides demand for FEE tokens.5. Developers/TeamPerhaps the most important part of the Leverj ecosystem is the base trading platform. Our world-class developer team has built a platform with expertly designed financial products that are carefully tested to be trader-friendly.
The LEV stakers only receive FEE if there is trading volume on Leverj generating fees. It is therefore critical that the trading platform attracts sufficient trader interest to keep up the volume being generated. This is the “spark” that the system needs to create the virtuous cycle in Leverj:
LEV holders stake ->
Leverj platform generates volume -> FEE is created and disbursed to LEV stakers -> Stakers sell FEE for ETH -> Traders on Leverj buy FEE for ETH to save on trading fees -> FEE is generated again
Benefits to ecosystem: providing demand for FEE (users buy FEE for ETH if market price is below fixed rate), providing convertibility to FEE fixed for ETH, providing value to LEV by enhancing staking value with quality platform.https://blog.leverj.io/five-kinds-of-users-on-leverj-82277d0acc8c
