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RE: A non-gameable liquidity points system
A group of large whales could potentially be in collusion and self-trade amongst themselves (or even any other account could 'take' that is under the control of a registered market maker) if there is a system like this.
that is what the matrix solves or at least reduces. Any trading among the market makers is capped according to some sane caps. So unless ALL market makers are in on the self-trading, it wont do much good.
It reduces the issue to needing just one non-selftrading market maker, versus needing all to resist the temptation
Remember the current system allows washtrades of 100000 STEEM to get 10 million points or something crazy like that. Require accounts of a certain age, cap the amount of points obtained from unregistered takers. That is the biggest problem with the current system, you can create a maker bot that only gets positive points, and you can have another bot that accumulates all the negative without any consequence.
By assigning all the negative points to the responsible marketmaker all the washtrading goes away. Now what would be required is outright collusion.
So to get points a sybil account needs to be created that takes from all the market makers equally. That would be very capital intensive and risky, so I doubt would be practical.
The idea is that the vast majority of all the trades are with registered accounts, the only exceptions are the (presumably) retail traders. Any registered market maker to registered market maker trading will immediately show a bias in the cross trade matrix I describe in the post and unless it is spread equally across all other market makers would be capped and not contribute to the points, ie. no incentive to do artificial wash trades
Maybe I didnt explain the anti-washtrade matrix well enough?
Yeah, I didn't follow that. Also, I wouldn't put it past existing market makers to do anything to their advantage to obtain liquidity rewards. Look at what's happening now with abit.
That is why I added the human involvement part. If all accounts are registered in order to receive points and unregistered accounts are capped to smallish max amounts and it is also pegged to the feed's price, then it isnt perfect, but the insanity of 100000 STEEM wash trades is over.
Using the anti-washtrade matrix has the effect of allocating rewards proportionally to USEFUL liquidity provided. With the assumption that marketmaker <-> marketmaker liquidity is not useful
I hope this proposal gets the visibility it needs as I feel it comes really really close to solving this issue. Any chance you can post it on slack? I have no access to it yet