Network Incentive (Primary Utility)

Objective: bootstrap network effects by using the token as a signalling device to coordinate agents.

A “Network Incentive” is a mechanism to issue additional BUMP tokens to Takers and Makers who “bond” BUMP with the protocol. This incentive is linked to the tier of Network Bond the user chooses to apply when opening their position.

While a user’s participation via the Network Bond contributes to the market’s network effect, the Network Incentive is designed to benefit the user directly. It offers the participant various benefits such as a zero trading fee, reduced premiums and increased yields. The Network Incentive is tiered, and during the initial phase of the Network Incentive, an introductory offer will be in place for a short period that simplifies the bonding reward structure while encouraging new participants.

The incentive is distributed to the user upon close, claim or withdraw.

BOND	TIER REQUIREMENTS*	TIER INCENTIVES**
INTRO OFFER	Minimum: 2.5% of user's Asset Position Maximum: 250% of user's Asset Position	50% APY
Tier 0	No Required Bond	Trading Fee: Current Rate Yield: Current rate Premia: Current rate
Tier 1	Minimum: 2.5% of user's Asset Position Maximum: 25% of user's Asset Position	Trading Fee: 25% Reduced Rate Yield: 2.5% Increased Rate Premia: 2.5% Reduced Rate
Tier 2	Minimum: 2.5% of user's Asset Position Maximum: 50% of user's Asset Position	Trading Fee: 50% Reduced Rate Yield: 5% Increased Rate Premia: 5% Reduced Rate
Tier 3	Minimum: 2.5% of user's Asset Position Maximum: 100% of user's Asset Position	Trading Fee: 100% Reduced Rate (Free) Yield: 10% Increased Rate Premia: 10% Reduced Rate

* For full-term length, calculated and applied in BUMP. All tier requirements are example figures yet to be determined except the Introductory Offer.

** All tier incentives are example figures yet to be determined except the Introductory Offer. Note there is also no trading fee at this stage but it will be implemented after the introductory offer expires.