Our trading contest on Arbitrum ended up with over 14,600 participants and $135M trading volume

8 min readAug 30, 2023

High activity for the recently concluded trading contest on Arbitrum allowed us to prepare some meaningful insights that we would like to share. The event exceeded all expectations, and resulting numbers are mind-blowing: 14,600 participants from over 120 countries registered; 415 trading teams formed; cumulative trading volume exceeded $135 mln; 10,296 trades recorded by 2,941 unique active accounts. We would like to thank all participants who engaged with the app and thus contributed to improving Marginly.

Winners take it all

To remind you, we were running individual and team qualifications among contest contenders. The top 100 individual traders and top 5 teams ranked by cumulative balances of the top 10 members at the end of the competition are eligible for valuable prizes. Both individual and team winners showed incredible trading skills and prowess to produce some impressive results.

For example, the individual leaderboard winners’ profits ranged from $5,452 to $48,232 on top of their initial balances. Given a starting portfolio valued at around $7,015, only traders who increased their worth by a solid 77.7% or more got to feature on the leaderboard. The top 3 winning teams showed remarkable consistency, with their top 10 traders all recording juicy profits ranging from $1,891 to $7,025.

Individual winners secured remarkable rewards of allocations ranging from $100 to $3,300, while the top 10 traders on winning teams stand to receive allocations from $100 to $ 2,500. All allocations will be assigned in native tokens during the future Marginly airdrop.

You can find the full winner list announced in the previous article. Congratulations to all traders who found themselves on the leaderboards!

How contest participants followed market trends

Out of all active traders, we had just 191 who managed to make a profit, while 2750 recorded losses. Cumulative profit was $788,129, while losses added up to $11,067,144. Trading is tough!

As the contest involved only virtual assets, we can assume that participants were less risk-averse in their trades, and it resulted in more significant losses than if they bet real money. The proportion between shorts and longs indirectly proves this assumption: despite adverse markets, long positions overall saw more trading volume ($74 mln) compared to short positions ($61 mln). You can see this distribution in the diagram below:

It’s also interesting to observe trading volumes across pools on Marginly. The GMX-USDC pool was the most popular by cumulative trading volume with $63.5 mln followed by FWETH-USDC at $39.5 mln and ARB-USDC at $33 mln.

As we see from the diagram above, the Ethereum pair had the most trading volume in the beginning, while GMX gained its volume more evenly with a spike around August 15. Things become clear when you take a look at asset price charts combined with trading volume by pairs.

As we can see from this chart, GMX has the most price fluctuations during the contest period compared to ETH and ARB, whose prices are almost correlated. Simultaneously, GMX trading volumes have captured price movements of underlying better than it was for ETH and ARB. There was a huge ETH and ARB volume traded in the beginning (primarily longs — $7.9M vs. $3.8M shorts), while it steadily decreased since the contest started. Initial GMX volumes are more moderate, and they spike during a significant GMX price downturn between Aug 15 and Aug 18.

This data suggests that ETH and ARB volumes were generated by less sophisticated traders, and it was clearly against the market (which was in an obvious downturn until then). Most likely, newer traders jumped in at the beginning to take up long positions in more familiar assets. Of course, as the contest was held on Arbitrum, ARB could be considered just as familiar as ETH.

Apparently, more experienced traders have chosen a pair with the most volatility. It’s not surprising that the GMX pool recorded the lowest number of unique users and highest trade volume, while the ARB pool saw the most users and the lowest trade volume.

A bird’s eye view of prevailing trading strategies

As we already mentioned earlier, the vast majority of traders significantly decreased their balance. To be precise, 94% of all active traders experienced losses in this contest. There are several factors at play here.

Firstly, most people just aren’t very good at understanding markets. Leveraged trading fundamentally is a win-more instrument. Winning traders’ gains are magnified by leverage, but so are losing traders’ results. Breakeven players observe greater variance swings in their performance due to leverage while staying around the expected value of 0 in the long term. What leveraged trading can not do is turn losing plays into winning plays. Anyone can take out max leverage and get lucky once, but consistent results actually take skill and understanding, which most amateur traders struggle with. In their cases, leverage can only amplify mistakes in trading.

Secondly, the contest by design encouraged taking on greater risks than normal. As said, there was no financial risk involved, so many traders were reckless. Also, some participants tried to game the contest by registering multiple accounts and entering opposite trades from them. The latter actors also lost because successful trading requires switching longs to shorts, and they most likely failed to do this, expecting that one of the sides should win anyway. As a result, only a tiny percentage of traders won the leaderboard: 1.7% of traders and the top 1.2% of teams.

As a natural consequence of the above-mentioned points, cautious strategies seemed less attractive to contenders because, along with the zero risk of losing, there was zero profit from winning small and missing out on the leaderboards. This made the all-or-nothing approach the most popular one.

Here are some general observations we made from the winning players that may improve your trading game:

Swapped their entire portfolio or the vast majority of it into stablecoins right away
Mostly opened short positions with up to 10x leverage
Actively managed their positions by increasing leverage when the market moved with them and decreasing leverage when the market moved against them
Non-stablecoins were used exclusively to pay off fractions of debt and keep positions afloat (avoid liquidations)

Based on these observations, here are a few tips for beginning traders and our future contests contenders:

Be conservative with leverage. The more leveraged a position, the harder it is to manage it. Even small market moves against your position may result in liquidation with high leverage.
Manage all open positions actively. The goal is not to get liquidated.
All funds that are not tied up in open positions should be kept in stablecoins. This helps to keep tabs on the portfolio at all times and eliminates volatility. All risk-taking should be calculated and done by strategically opening positions rather than holding bags of volatile coins.

Arbitrum is a welcoming and active ecosystem

Let’s now break down the activity of users during the contest. We should admit the organic activeness on Arbitrum — we’ve got a lot of interest from the side of its community members, and many of them joined the contest.

We were hosting representatives from over 120 countries. There are Indonesia, India, Vietnam, and the US among the most active countries on the list. And it’s rather expected since these regions are known for their interest in crypto and are active in many communities across the DeFi space. You can see the full lowdown of user activity by countries below:

Another interesting angle at the user activity is an overview of activity in particular pools. ARB-USDC was the most popular pool with 2035 unique users, followed closely by the FWETH-USDC pool with 2002 users. GMX-USDC was the third with 1880. There were 2941 unique active addresses in total.

These numbers look quite promising in spite of our production launch. We hope the most active traders who contributed to this contest will keep active in our community and start using Marginly once we go live on Arbitrum (soon™).

What to expect next: reward distribution and new trading сontest on zkSync

We will distribute rewards to Arbitrum contest participants in the coming two weeks. As we mentioned earlier, only participants who obtained Marginly Paper Plane NFT or OAT are eligible to receive their rewards. Here is what they can expect:

All qualifying winners get special NFTs
These NFTs serve as eligibility criteria for Marginly’s native token airdrop
The airdrop is to be conducted after TGE. Follow our socials to catch the big moment!

The second testnet trading contest is set to begin on August 31st at 3 PM UTC on the zkSync blockchain. $40,000 in Marginly native tokens are to be awarded to the best and luckiest 150 traders. The first prize is a mammoth $6,900, while the lowest prize is $69. Here is the full prize distribution to get your juices flowing:

Now that we’ve hopefully piqued your interest, do not hesitate to register: participation is free, and so are testnet assets to trade with. You’ll start with a $10K testnet USDC, and the world is your oyster from then onwards: two weeks of excitement and non-stop action await!

Got friends who might be interested? Invite them and play together: you get a chance to win extra prizes from the referral prize pool while your friends receive an extra 10% on top of anything they get from the leaderboard. It’s a win-win situation for all parties.

For more information on the zkSync trading contest prizes, rules, and other applicable terms and conditions, refer here.

A Big Thank You!

There has been a ton of trading activity on Marginly during the Arbitrum contest. Although the process might seem random and chaotic to newcomers, patterns can be observed, and valuable lessons learned. We hope that beginner traders and crypto enthusiasts in the Marginly community can take away valuable insights into what it takes to be a successful trader.

Last but certainly not least, we would like to express our gratitude to everyone who took part in this first event on Arbitrum. Your enthusiasm for leveraged trading with Marginly helped us create a contest for the history books!

Important note: Marginly Beta Contest is a simulated trading environment. No real funds are involved. All trading activities are conducted using virtual assets.