each individual user's "swap-weight" (the plankton must be able to grow vs. whales shouldn't be able to play the market I mentioned earlier)
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each individual user's swap-weight (which would scale linearly from some bigger number like 3 or 5 for the tinyest deposit and some fraction like 0.2 for the biggest whale on the swap market
I think this is a big obvious flaw in your plan - you're relying on a 1:1 mapping between people and accounts to identify "whales". If the rewards from the swap market were 25x higher for small holders as they are for large holders, I would bet my last dollar that every 'whale' on the platform would immediately seek to open dozens of separate accounts to split up their balance and get the beneficial rate.
Besides that... what exactly was the ideological justification here? Seems rampantly unfair to treat one guy's invested dollars differently when they all serve the exact same purpose.
I had that in mind and yes, it would be an obvious flaw if it weren't for the KYC-rules that BFX has to observe by law which means any new account has to be verified by ID before one can do anything meaningful with it so duplicate accounts should be really easy to spot. Sure, some guy with multiple IDs, double nationality or several adresses might be able to play the system a tiny little bit... but what are the odds and what dent would that really make?
Now we might as well leave that multiplier out of the game entirely as with a base swap rate based on volatility it doesn't make too much sense anymore. Also: the simpler, the better. That richness-multiplier was more of a bugfix against "riches getting richer" to my initial idea where the base swap rate was some fixed value. Nevertheless, it would still make the swap market a bit more attractive to smaller investors. Nobody said it had to be such a giant range. It could as well be a 1x multiplier for whales and 1.1 for plankton, hence my mention of Excel.
Another brainfart: we could make that multiplier depend on the duration the swap has been active, some kind of steadiness-bonus. The longer your swap-balance hasn't reached 0 the higher your multiplier... Although that could take the volatility out of the markets lowering swap rates in the process which seems like a self-destroying feedback loop not much unlike the current FRR. Also, the daily earnings would already act as some sort of interest compounding, a rising multiplier for steadiness would give us compounded compounding which doesn't sound right at all... Oh well, just a brainfart, doesn't seem to work out but throwing it out here anyways now that I typed it.
Interesting. What is your reasoning for using market volatility as an indicator other than it can be used as a way to adjust the rate? A more fundamental question would be:
why does the rate need to be adjusted?A swap fund (SWF) would be an odd animal. If we ignore risk, it has some very odd features. It has no competition, it's scarcity can be artificially controlled (placing a cap on the fund), it is never consumed, and it has a captive audience. The only thing I can think of to compare it to is the diamond market as controlled by De Beers and even that falls apart if you look at it closely. It has does have some parallels to the Fed.
It only exists to serve margin trading and it is constructed in such a way that traders are exposed to almost, if not all, the risk. The only thing that really gives it any value is the trader's (for lack of a better word) greed. In the real world, if a trader's position goes south fast enough the SWF would suffer a loss, but Bitfinex's implementation has rigged the deck. If a flash crash happens, they slow the trading down so that the SWF has a chance to pull it's money out at the expense of the traders.
Given the massive advantage that a SWF has over it's 'customers', does the SWF need to twist the knife even more by varying the rate? Maybe the institutional advantage is reason a SWF shouldn't be created.