October 2022 Proposed Incentive Adjustments

General Discussion
1

Foreword

As the RAI experiment continues, it’s once again time to continue the original plan of weening off of FLX incentives. These incentives, among other things, were introduced to incentivize certain liquidity behaviors (to varying success) and to bootstrap adoption. I feel we are at the next crossroads of the protocol’s maturity to keep on-track with the original intent of lessening these incentives (and the associated noise it introduces to the Money God’s work).

Further, but secondarily, the DAO should also seek to make sure that it protects itself from “overspending” in its activities. My casual analysis of FLX outflows from incentives suggests that, without changes, the FLX outflows will send the incentives treasury balance and the staking incentives balance to insolvency in a matter of months, notwithstanding the marginal sell pressure that will occur in the meantime.

Therefore, I believe that sticking with the community’s original intent of reducing FLX incentives is prudent.

Path of Incentive and Staking Reduction

I propose to reduce the November 2022 FLX incentives for Uniswap V3 Mint + LP, Uniswap V2 and Curve LP campaigns by 25% and the December distribution for the same campaigns by 33.3% for a total reduction from today’s levels of 50%. Or, to put another way, the DAO currently spends 160 FLX per day in incentives, and I propose reducing this number to 80 by the end of this year.

From there, I think we should stabilize at 80 FLX per day in incentives until about the March 2023 distribution, during which we should again reduce incentives at the same cadence, ultimately reducing incentives to 25% of today’s spend.

With respect to FLX stakers, I believe it to be a “fair” option to reduce staking rewards in-line with the reduction in incentives (the reduction in sell pressure from incentives offsetting the reduction in staking rewards). However, I propose to reduce staking rewards by half as much as incentive rewards at each point. For example, the November reduction would be from 100 FLX per day to 87.5 FLX per day and then 87.5 FLX per day to 75 FLX per day in December. The same would follow for the proposed next round of reductions at the end of 1Q’23.

Proposal

Given my position above, I propose the community gathers feedback on the first wave of incentive and staking reductions (November and December). We will discuss and potentially vote on the second wave of reductions next year, should this proposal find sufficient support to proceed.

Please indicate the choice that most closely matches your position
  • I support the proposed first wave of reductions for incentives AND stakers
  • I support the proposed first wave of reductions for incentives BUT NOT stakers
  • I do not support any changes to FLX incentives at this time
  • I support different changes to incentives/stakers and commented below with those changes.

0 voters

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