| id | Title | Status | Author | Description | Discussions to | Created |
|---|---|---|---|---|---|---|
| TIP-113 | LP Incentives Overhaul | Implemented | cyberduck | Tapering of Arrakis and Velodrome incentives / bribes | https://discord.gg/rPpPcMXSeU | 2022-12-14 |
This TIP proposes to taper incentives to Arrakis THALES-ETH pool and bribes to Velodrome THALES-USDC and THALES-WETH pools, with the latter in effect continuing upon completion of the trial period.
The Velodrome trial showed that bribing in Velodrome is marginally more efficient in driving LP liquidity than providing direct incentives to Arrakis Uniswap pool, but that it does not scale linearly and that nor is it predictable and easier to control. Nonetheless, Velodrome does provide marginally better ratio of TVL and significantly more volume for direct cost of incentives. While there is a consensus that we have reached a plateau of willing LPs, abandoning the Velodrome dex would empirically lead to an overall higher cost for existing TVL, and as such this proposal suggests continue, but to taper down on bribes to levels similar or slightly below the incentives provided to Arrakis LPs. It is noted, that Thales can boost the Velodrome LP APRs with ongoing veVELO relocking and voting. This proposal also suggests to vote-boost both USDC and WETH pools equally.
This proposal also recognizes the benefits of having liquidity in Arrakis Uniswap, be it more predictable control of liquidity scaling, Uniswap's lindy, and overall redundancy by having risk spread across multiple dexes. As such, this proposal recommends we continue incentivizing Arrakis at slightly higher amounts than Velodrome.
The motivation behind overall incentives tapering is twofold: conclusion that liquidity TVL has plateaued and that we are currently spending an inefficient amount on overall incentives, as well as the premise that Thales through tapering should infact be used for building direct protocol owned liquidity (POL) by pairing it with proceeds raised through Thales' safebox. This is to be expanded on in a future TIP.
This proposal suggests direct incentives and bribes as follows:
Arrakis Thales / WETH - 5,000 OP + 30,000 Thales
Velodrome Thales / WETH - 10,000 Thales + 50% veVELO NFT vote
Velodrome Thales / USDC - 10,000 Thales + 50% veVELO NFT vote
Bribes collected through voting in Velodrome are to be compounded into both pools weekly along with the claim of the veVelo rebase.
The incentives in this proposal are to be valid for a period of 2 months from implementation.
n/a
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