Kwenta has seen impressive results since the launch of Perps v2 and has maintained its place among top DEX perps venues. Although several newcomers to the space are jockeying for dominance, Kwenta consistently places in the top 3 DEXes for daily volume and boasts one of the highest concentrations of whale users.

How has Kwenta been achieving this success, and what’s next?

My name is Burt Rock, and I hold the title of MarketingDAO PM at Kwenta. In this role, I’ve taken the lead on several incentive programs as well as directly managing support and communication with many of Kwenta’s largest traders. To find Kwenta’s path forward, let’s explore our Kwenta’s current successes, challenges, and some growth strategies and tools for the DAO to utilize as we build toward our next phase.

High Value Acquisitions

Kwenta’s major success has been on acquiring the largest users. We’ve used relatively simple methods to accomplish this, but we’ll keep the details of this plan vague to avoid giving competitors a roadmap for a copy cat strategy or poaching. In lieu of a description of how the nuts and bolts of Kwenta’s current whale onboarding works, let’s take a look at the results.

Although wallet balances are not the only useful metric for evaluating the quality of user acquisitions, high value wallets are unlikely to be sybil attackers or wash traders, and have the ability to generate large volume and revenues.

Here is a snapshot of recent Kwenta users:

Kwenta

For comparison, let’s see a competitor who have achieved similar recent performance:

Gains Trade

Finally, we’ll take a look at Polynomial, a more closely related ecosystem project on the same network, utilizing the same liquidity source:

Polynomial

Although this is not a comprehensive view of decentralized perps venues, this snapshot highlights the past successes and the future growth goals for Kwenta. Kwenta is one of the dominant exchanges for the important segment of 6-8 figure wallets. Kwenta users have a high median wallet balance, and have the highest concentration of users around this level.

Kwenta’s aim in the coming months will be to grow and maintain this solid lead on acquiring high value traders, but also to increasingly focus on growth in daily active users and smaller retail users, which are important for building a broad and resilient user base and community. To accomplish these goals, Kwenta will use a few specific tools.

A Tiered Incentive System

Building on Kwenta’s whale onboarding success, I have drafted a proposal for a tiered incentive system, which specifically targets users of other exchanges who have done volume in the past and offers $KWENTA incentives for those who migrate to Kwenta and achieve volume milestones. The use of historical data from previous exchanges ensures that wallets can be screened for quality before eligibility criteria is set, preventing sybil attacks or other malicious behavior. Users onboarded through this program will also be particularly valuable acquisitions for affiliates participating in our referral program, described a couple sections below.

Although the plan is already drafted, Kwenta CCs are still gathering the necessary data to finalize the targeted users and incentive details, which should allow the plan to be presented to the Kwenta Council over the next week.

Courting Retail

Where Kwenta’s scrappy approach to marketing has been successful with whales, it’s so far been unable to scale to capture the smaller retail success that many competitors enjoy. While the deliberate focus on whale onboarding is effective in generating volume with minimal marketing spend, the current juncture calls for a strategic pivot. The recent growth plateau resulting from these strategies is an opportunity to shift towards enhancing metrics such as daily active users, elevating brand recognition, and fostering the expansion of our trading community.

To accomplish these goals, marketing will increasingly focus on more traditional growth strategies such as initiatives with partners, trading competitions, and common web3 advertising venues. One important tool in exploring and evaluating these more traditional venues will be the launch of the Kwenta Referral Program, which provides on chain data by which to measure a campaign’s success and ensure resources are directed toward the most efficient outcomes.

Referrals

The Kwenta Referral program is a highly anticipated growth tool which will allow for a fully on-chain system of NFTs to govern the distribution of rewards to affiliates. The affiliate program has been designed and built from the ground up, and should have a soft launch within a week of this publication.

Soft Launch

The initial soft launch will be gated, allowing Kwenta core contributors to work directly with a small number of affiliates to test and provide feedback on the program. While this period should allow us to stay on top of bugs, feature requests, and monitor the gameability of the referral program. We expect September 1st to be a good estimate for this launch date. The community can expect more support from Kwenta CCs including assistance with contacting traders and promoting your own codes in the early days of the launch.

To participate in the soft launch of Kwenta’s referral program as an affiliate, fill out this form

Future Funding

Although the initial launch will leverage $KWENTA tokens as rewards for user acquisition, the goal is to make this a temporary loss leader while the framework for v3 can be set up. Eventually, we’d like to transition affiliates to earning sUSD, and our CCs and governance will be working with Synthetix governance to advocate for our needs in funding this program.

The Kwenta SDK

We’ve also seen an increase in developers using the Kwenta SDK, which opens up a whole new avenue for growth among bot developers and programmatic traders. To further track and assist in onboarding new builders and integrators, Kwenta will separate its tracking code which identifies the source of volume to Synthetix perps and give SDK traffic a unique identifier. This will allow us to monitor the volume, growth, and strategies employed by SDK users to better serve this user segment.

Okay, so what about revenue and tokenomics?

While this blog is meant to focus primarily on Kwenta’s plan to grow our traders and associated metrics, this topic is intrinsically connected with DAO revenue and tokenomics. There is a vibrant and ongoing discussion in Synthetix governance around fee sharing, which I believe is our best opportunity for sustainably funding the DAO and returning value to $KWENTA stakers.

The Virtuous Cycle

Our ability to spend on marketing efforts or fund growth initiatives in a long term, sustainable way depends heavily on our ability to earn revenue when these initiatives are successful. I’m confident that our discussions will reach a conclusion which allows for a virtuous cycle and mutually beneficial relationship between Kwenta and Synthetix, allowing Kwenta to aggressively pursue users, lead the growth of Synthetix perps, and reinvest a portion of Kwenta’s revenue in to ever more ambitious campaigns and product improvements.

A Timeline of Proposals

For more specific numbers and a breakdown of exactly how Kwenta core contributors and governance see the future of Kwenta tokenomics and use of revenue, stay tuned for a future blog which will include not just my own ideas, but a few competing concepts from the community which governance may consider.

With the next epoch of Synthetix governance beginning on August 30th and the testnet release of Perps v3, details of these plans should be released within the first couple weeks of September and be settled before the end of the same month.

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