CIP: Draft title: Affiliate Program Incentives author: @middleway.eth status: Draft created: 2022-04-08 requires: <>
CowSwap offers a referral feature that allows users to generate their own referral link, which when shared with NEW users, will count their trading volume towards referral balance.
Since the launch of the affiliate program in November, referral links have been shared and used to generate up to $371M of trading volume. This volume was generated during a time period where incentive structures were not yet in place. It has proven to be a tool that can help with onboarding new users and thus achieve higher goals benefitting the CoW Protocol ecosystem. Network effects are crucial to CowSwap, as growing order flow increases the chances for finding CoWs, and hence facilitate better prices to all CowSwap users.
The aim of this proposal is to define an incentive structure which rewards users who use their personal affiliate links to attract new traders. Order volume coming from referral links will count pro rata for the distribution of the affiliate program award payout. We expect this to become a meaningful source of trade flow for the protocol.
In a similar fashion, app IDs which can be used by external integrations to count their order stream to CoW Protocol, should equally be rewarded. The focus for this Affiliate program is incetivizing the onboarding of new users while (frontend) integrations usually are a longer term relationships and thus require a different compensation model. For this reason it is suggested to include APP IDs incentives in a different proposal.
- Help new users discover CoW Protocol and consequently increase the trading volume on CowSwap and the number of CoWs
- Lay out an incentive structure that will allow people to benefit from sharing CowSwap with their audiences and onboarding new users to CowSwap
- Reward distribution will happen on a monthly basis.
- For the first three months it is proposed to have a minimum monthly reward of 50,000 COW tokens.
- In order to not limit the scope of the program, it is proposed to add 1 COW tokens to the monthly reward pool for every $1000 worth of Eligible Affiliate Score generated on that month.
- At the end of the month the Eligible Affiliate Score is $0.5B
- Rewards in the pool for that month will be 50k + 500k COW tokens
- The DAO is expected to adjust the token allocation for this program based on its ability to lead to a meaningful impact on new users and volumes of the protocol.
- Each month the respective award will be distributed proportionally to the participants’ Affiliate Score generated on that month.
- Any individual participant will not be able to take more than 20% of total rewards in a given month. If any number of participants reach more than 20% of the overall volume generated, they will get 20% each and the remaining rewards shall be distributed proportionally to the remaining participants.
- Unclaimed rewards will be kept in the user’s balance to be claimed together with the next month’s distribution, thus low value rewards are not lost and can still be claimed in the future with additional rewards.
- A Dune Dashboard will publicly track the up-to-date state of the affiliate program. Initial dashboard is available here
In order to make a fair and effective compensation, it is proposed to use an affiliate score that will be composed of few parameters. Additionally we define a few token lists that will help to mitigate exploitation of the program.
- Only trades with both the buy and sell token being in the program’s token list (list still to be specified), will be counted towards the Affiliate Score
- Stable-Stable trades (out of a dedicated stablecoin list) will be counted as stable-factor*volume where stable factor is proposed to be set to 0.1
- An address volume will only count if it made its first trade through a referral link
- A single address will be capped with regards to the volume that can count towards the Affiliate Score:
- Volume of its first 30 trades
- Volume traded up to 30 days from its first trade on CowSwap
- The higher of the two, but anyway no more than $1m worth of Affiliate Score
- Exactly the same compensation model will be used for retroactive reward.
- (Back of the envelope calculation: ±600k COW tokens in total)
In order to make the program even more attractive and easier to promote, it is proposed to set a one time reward for new traders that are onboarded through the Affiliate Program. In order to prevent users from creating accounts just for getting the reward, the following reward rules are proposed:
- Accounts that are onboarded to CowSwap with an affiliate link will get 50 COW tokens claimable on the next reward distribution, as long as they hold an ENS name.
- Limited to 100 users per Affiliate link (per month?)
As many other pseudonyms systems, the program is expected to bring with it sybil attack vectors. For example, people might try to wash trade with multiple of their accounts and thus generate significant trading volume with low cost and no change in position (low risk), which in turn might boost their rewards although realistically their trades provide low to non value to CoW protocol.
It is proposed to set up a reward for people with data analytics skills that can contribute by finding addresses that clearly try to abuse the Affiliate Program. A committee will review applications and decide on a reward based on the robustness of the data collected, the severity of the abuse found, number of addresses involved etc.
The committee might be the same one for the Grants Program or a dedicated one. The proposed maximum monthly reward is 60k COW tokens which the committee can but is not required to allocate for applications every month.
- Should the program treat app IDs the same way as referral links?
- Should the CowDAO come up with a different incentive program for applications and integrations that use app IDs?
- Token allocation amounts for the retroactive and for the monthly rewards
- Token lists to be used for counting volume towards the affiliate score