Payment flow

DFlow provides wallets with a stable and predictable revenue stream. When an auction reveals a winning market maker, the bid amount is transferred to an escrow account on the public DFlow Chain. The order flow source will start receiving and realizing payments when it starts delivering orders to the market maker. All payments are in USDC and happen in a pro-rata manner.

For example, if a market maker bid 2,000 USDC for an auction specifying $1,000,000 in notional size, the amount paid out to the order flow source for a delivered order of size $10,000 will be $10,000 / $1,000,000 x $2,000 = 20 USDC.

A special case: payment in lieu

If a market maker doesn't offer a firm quote, the order flow source may accept a payment in lieu of payment for delivery of the order to the market maker, or a payment in lieu, for short. Each auction specifies whether it allows payment in lieu.

If a market maker wins an auction that allows payment in lieu, but the market maker doesn't provide a firm quote for a request routed via the auction, the order flow source can accept a payment in lieu. To accept the payment in lieu, the order flow source must approve the payment in lieu by signing a message using one of its endorsement keys and then present this approval to the DFlow node that originated the payment in lieu offer.

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When to accept payment in lieu

Wallets are encouraged to accept payment in lieu if and only if the retail trader executes the trade with another counterparty. The wallet may accept a payment in lieu every time the market maker does not provide a firm quote, but this may adversely impact order flow revenue in the long run.