Q2 2022 Rally Reward Changes

We’ve designed an update to the Rally Rewards program in conversation with our community over the past months and after extensive internal modeling. In the upcoming months, the Rally Rewards program will be evolving how communities become eligible and can earn rewards.

The first portion of changes that will be rolling out next week and the changes are detailed below.

Daily Rewards

Rally Rewards will be moving to be a daily reward system rather than a weekly reward system. We believe that encouraging more frequent login will lead to better behaviors that will be beneficial to their entire platform.

Claiming Rewards

Users will now need to login to their account to claim their rewards. Per the change to daily rewards, we believe incentivizing more active participation with accounts will lead to better engagement and higher coin ownership. However, there is no expiration to the claim; a user can go on vacation and not check their account and come up and claim any rewards that have accrued during their absence.

Claims will be retrievable via a single claim button for all rewards the user has accumulated to maximize simplicity. We will also ensure there will be a clear UI to show how much of a user’s reward is due to their different Coin communities.

Reward Eligibility Calculation

This is an evolution of the current reward system calculation that incentivizes Coins to lock up $RLY inside of their Token Bonding Curves.

The current reward calculation determines a Coin’s eligibility by looking at the 4-week moving average for $RLY backing against the current $RLY backing. If the Coin’s current $RLY backing number is greater than the 4-week average, the Coin accrues rewards during each hour that this remains true.

Overall, our aim with the changes to the Reward program was to address a couple of different pieces of feedback we have received from the community regarding this current rewards system:

  1. Rewards could be biased towards new Coins: Coins in the early stages of their growth would consistently exceed their moving averages. However, Coins with highly volatile trading profiles could also see large fluctuations when comparing against moving averages with less than 4 weeks of data.
  2. Rewards required a high degree of active management: Creators could spend a tremendous amount of their time managing the average $RLY backing of their Coin economies and often held substantial amounts of $RLY in order to intervene to stabilize their Coins “in rewards.” This does not represent a productive use of Creator time or resources relative to outright growing their Coin communities.
  3. It was not rewarding Creators or Communities that were growing their Coin economies slowly but stably: Because the current rewards system only looks at the difference over a moving average, Coins that had seen spikes in growth were being rewarded but Coin that were slowly but steadily growing could be overlooked in the current rewards calculation.

HOW TO EARN REWARDS WITH THE NEW CALCULATION MODEL

Step 1: Coin Economy Reward Calculation

All Coins (see note below) will earn rewards, and the amount of rewards per Coin will be calculated based on the sum of the square root of each holder wallet’s $RLY backing divided by the total of that sum for all Coins.

Numerator: For a coin, sum the sqrt of each holder’s $RLY backing.
/
Denominator: Sum of the results of the above calculation for all Coins.
=
Output = a Coin’s share of daily $RLY rewards

By changing the calculation from the four-week moving average of $RLY backing to the above formula, this enables more Coin economies to receive rewards on a consistent basis and benefits Coins who have wide participation from their community.

Example:
For example, if $A Coin has 4 holders that all have 4 coins each, square root the holdings in each wallet totals 8 (2 + 2 + 2 + 2).

If $B Coin has 1 holder with 64 coins, the square root of that is also 8.

$A and $B Coins would split the rewards for that day 50-50. So if the total $RLY reward for that day is 100 $RLY, each Coin would receive 50 $RLY in rewards.

Step 2: Individual Wallet Calculation

After that initial determination of total reward amount for a given Coin, individual rewards will be assigned based on the percentage of average Coin holdings. This is unchanged from the current system.

For example, if $X Coin has earned 100 $RLY for that day and you own on average 20% of the total circulating supply of $X Coin, you would receive 20 $RLY for that day.

We believe that this new calculation of Community Value achieves on the following:

  • Rewards should be going to both new and existing Coin communities
  • By evolving the current $RLY backing calculation, we are minimizing the initial potential impacts of changing the rewards program while improving the incentives of that program.
  • $RLY backing is a consistent metric that allows more direct comparisons in Coin economies that are on different token bonding curves.
  • By square rooting the $RLY backing amount per Coin holder, we flatten the overall values across Coin economies in order to mitigate a winner-take-all effect while incentivizing Coins to encourage wide ownership.

*Coins can be deemed ineligible based on repeated ToS violations and/or by failing to meet the minimum activity metrics (read more here)). There are also other Coins such as $R Coin that have been non-rewards Coins from launch and their non-reward status is posted prominently in the Coin benefits section.

5 Likes

Overall I think the changes are good for constant rewards & daily claiming. However, I believe the Coin Economy Reward Calculation can be re-examined to more fairly treat smaller communities that are still contributing to the RLY lock-up in Creator coins.

If the reward system’s intent is to “incentivizes Coins to lock up $RLY inside of their Token Bonding Curves.” I am concerned this is not fully addressing smaller communities and community members that are doing so & having a single user having equal impact on $RLY lock-up in a coin as 8 users but having unequal shares of CAR.

It seems to me that the square root function in the Coin Economy Reward Calculation actively discourages having a higher density of Creator Coins held per user.

So 2 Creators have 100k RLY backing. One grows their economy through close knit community while the other is more widespread however the widespread distribution is favored in the new rewards calculation.

What is Rally’s intention is rewarding one method of community growth over the other? What does “wide participation from their community”?

Is there not equal value in re-engaging supporters for depth of participation?

Thank you for your considerations, looking forward to expanding the discussion.

Yes, I agree that the square root does benefit coins with multiple holders more than coins with large holders. But ultimately it is much simpler to scale horizontally than it is to scale vertically. That is, if you only have one holder, it can be difficult to get them to purchase 10 additional coins. But it’s relatively simple to get 10 more people to purchase 1 coin. And more purchases of coin means overall better value per coin when using it to redeem benefits; which does indirectly benefit the larger holders.

So far as I can determine, the only deep fundamental flaw of the new system is that it encourages botting and multiple accounts. But both of these are against TOS and there are numerous systems in place to shut that down. So those systems should expect to get much busier, but otherwise it should end a lot of negative behaviors in the current design, while mostly benefiting most holders. Overall I think it should be a much better system, generally.

3 Likes

Great work pushing this through everyone. While I do believe this new “quadratic wallet backing” method will fix most of the issues with V2 rewards, my main concern is the inability for the team to address the main reason for the change.

We are here because the V2 rewards was easily gamed and put a huge amount of new RLY supply in the hands of profit-seekers not people adding value to the community in any way. The other problems identified above (a bias to new coins, active mgmt of rewards, and not rewarding slow and steady growth) are only tertiary issues.

With a significant amount of the past years’ new supply in the hands of profit-seeking speculators, Rally, like many projects with a large speculative community of users, has suffered greater in the recent market downturn as these speculators are the first to sell with only short term profits in mind and little belief or care in long term project vision.

If the plan is to change the system to greatly reduce these users’ ability to profit, when the market rebounds, these users’ capital will not re-enter the Rally ecosystem through Rally.io and could cause a serious impact to Rally’s ability to rebound with the rest of the market.

Thus, implementing this new system in June could be a big mistake. This would be analogous to a DeFi platform offering 450% APR on staking $RLY and shifting that to < 50% just after a major crash… nobody would re-enter that pool and it could be dangerous timing to implement such a shift in incentives. (Yes, the theoretical returns for those gaming the rewards program is/was as high as 450%).

The new system WILL put an end to the majority of reward manipulation, and yes, it is critical Rally gets there soon.

I don’t know the right answer to the best implementation plan with the least impact, but I do know if that if the team hasn’t identified this as the main driver behind a rewards re-write then you certainly aren’t prepared to put that plan together. This needs to be applied with the context of the present climate.

The most important aspect of project longevity is to ensure new supply leads directly to project growth. This is a step in that direction… but this one is not as simple as analyze and deploy - I am hoping you are all considering / have considered the above concerns.

Yes, me again :slight_smile:

After some thought, my suggestion would be to wait on deploying V3 rewards once one of the SuperLayer projects starts bringing on significant new purchases of Rally (or a major creator onboards Rally.io) to off-set the sales that occur once these Reward leaches realize their gig is up.

This brings up a good point! Rally.io platform has extensive anti-spam and anti-botting measures in place. Are there going to be similar deterrence systems in place once Creator coins are launched and migrate to SOL? I’d be more concerned with a bot net spinning up 100’s of wallets and sending creator coins to each of them.

Or is the SOL Creator Coin CAR going to be a different formula all together?

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SOL apps have their own network rewards. This is the implementation of RallyIO’s share of RLY Network rewards.

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The daily reward system is a clever idea, great proposal.

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Heavily recommend putting in a minimum for the user to count towards the calculation. Not sure if the Rally team is aware, but since this post many coin communities have been “gifting” incredibly small amounts of their coin to thousands of wallets so when this new system kicks in they will have a much wider support base and therefore a larger share of the rewards.

100 coins split between 100 users = 100 points
10,000 coins on one user = 100 points

For a lot of coins, 100 coins is only $2-$10. It doesn’t seem right to reward this behavior equally to a real supporter buying $200-$1,000 of coin, which is clearly more beneficial behavior than spam sends.

By introducing a minimum, mass sending would have a real risk and cost associated to it, rather than being an almost free way to game the system.

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Yes, like thousands of holders with 1 coin each. My favorite is those that buy in because they are close to the servers out West and forensically can be seen buying first before any one else, but then dump their coins when they feel like they burned out the creator and their coin for as much as they could.

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