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Our Prize payout mechanism explained
Our Prize payout mechanism explained

Wondering how we calculate the rate of prize payouts? Read on:

M
Written by Mia Lee
Updated over a week ago

Whenever we are hosting trading competitions we will use the ad hoc average daily closing prices of the XYZ/USDT trading pair during the competition period as the XYZ/USDT exchange rate for XYZ distribution.

Ad hoc average daily closing prices are calculated using the same mechanism for every training competition on the FMFW.io unless otherwise specified in the Term & Conditions.

Calculations include the following: Sum of the closing price of each day during the trading competition / the number of trading competition days.

Below further details of the mechanism are outlined using an example.

1. Let’s imagine that FMFW.io conducted the trading competition for XYZ/USDT (this is an example, XYZ token is not listed on the FMFW.io) which lasted 5 full days:

1. 1st day's closing price of XYZ is 1\$

2. 2nd day's closing price of XYZ is 2\$

3. 3rd day's closing price of XYZ is 3\$

4. 4th day's closing price of XYZ is 2\$

5. 5th day's closing price of XYZ is 3\$

2. Daily closing prices during the competition will be added up which leaves us with the sum of the closing price of each day during the trading competition (1+2+3+2+3=11). This sum will then be divided by the sum of days in the trading competition: 5 (Days of trading competition)

3. For the final closing price, we divide the total sum of closing prices by the total sum of days which results in 11/5 = 2.2. This means that 2.2 USDT is our ad hoc average daily closing price for this trading competition.

## Why we use this rate?

You might also wonder, why this calculation is necessary. We're always trying our best to be fair while also respecting token projects who're often sponsoring competitions.

1. Due to the volatility of cryptocurrencies, we can't fix a market price. This wouldn't just be unfair to our users but also to the token companies sponsoring the prizes. As distribution in itself takes time, the market price will inevitably differ.

2. We also can't really fix a certain exchange rate nor define a date to do so as that'd run the risk of manipulating markets.

3. The above calculation of the ad-hoc daily closing rate is a compromise that helps avoid market manipulation while providing a mechanism that respects users and prize sponsors equally.

If you still have questions about the process, please reach out to us via the chat widget on the right side or send us a message in our telegram channel. We're happy to help!