Pause Liquidity Incentives Until YAM/ETH Update

** Pause Liquidity Incentives Until YAM/ETH Update**

Basic Summary
We are currently paying approximately 70k BoU YAMs in incentives to LPs, despite consistent negative rebases which do not utilize this liquidity. We propose to pause incentives for LPs and reinstate them on the YAM/ETH pool.

Abstract
The incentivizer contract has a simple breaker switch to turn off incentives at the end of a weeklong cycle. We would utilize this breaker to pause incentives on YAM/yUSD.

Motivation
Pausing incentives on YAM/yUSD would have several benefits:

  1. It would prevent the protocol from continuing to pay for liquidity it is not using.
  2. Increase ease of governance participation until the LP voting is implemented
  3. Does not decrease the amount allocated to LP rewards – it just shifts the timing to better align the incentive program with protocol needs and market conditions

If positive rebases do occur while incentives are paused and liquidity is low, we will simply see small rebases that quickly hit 5% slippage and YAM accrue to the treasury.

Poll to Measure Sentiment

  • Pause LP Rewards
  • Continue LP Rewards

0 voters

1 Like

大力赞成,这是好的一𠆤开始,希望团队重视起来

The team once again gave us hope and support

1 Like

yam will be great again

2 Likes

Suggest that during the lp incentives pausing, when a positive rebase occurs ,the treasure hold all the yam from positive rebase until the eth-yam lp incentives launched. After that the treasure can sell the yam .

3 Likes

I strongly don’t agree. Let me preface by saying I am an LP.
A few reason why we need to keep providing incentives to current LP:

  1. Incentives keep the value locked, if these incentives are taken away before the new Yam/ETH incentives are ready, there will likely be a sell off of Yams.
  2. There are no other Yam products that are production ready right now aside from the treasury. I think losing the only thing that creates an incentive to stay is a really bad idea.
  3. Any LP providers that have been staked since the beginning have suffered large losses from yam value loss and also impermanent losses. The impermanent losses are partially caused by the treasury purchases of yUSD directly from the LP providers.
  4. Nothing was said about incentives ending or being paused or the incentives are directly and only to provide liquidity for the treasury to sell to.
  5. You would only be preventing a minimal amount of inflation till the end of the month (when the new pool is supposedly going to be released) while the damage could be much greater than that.

I strongly suggest we do not do this.

2 Likes

i agree with this, even though i think it will lead to unstable price and against from LPs. But in a long run, negative rebase is the time to fix things with less cost. People don’t want to fix things in positive rebase and reduce the treasury income.

1 Like

Definitely understand these concerns and glad you brought them up. It’s definitely natural to not want to have rewards reduced. But the important thing is that they’re not going away forever, we’re just shifting their timing to be higher impact and value.

If we take away incentives and LPs remove liquidity, there will be no liquidity to sell into, so I don’t think this is a huge concern. Also, I think many LPs are there because they believe in the protocol and want to accumulate YAM. If they are only there to farm and dump, then they’re not people we want to be giving free (Yam protocol gets nothing in return) rewards to anyways.

We’re not losing the treasury by any means. We still have our existing treasury. By being deliberate about when we’re incentivizing deep liquidity, we’re actually going to help the treasury grow more.

This has been my main hesitation for altering incentives for a while. They suffered heavy losses in the beginning. We’ve now had 3 weeks of incentives with no positive rebases (the reason we incentivize the pool) and we have to think about the longterm value. Building that is what really allows them to flourish. And being careful with our rewards helps that happen.

Incentives are just that – incentives, meant to achieve a desired action – in this case liquidity for the treasury to sell into. While maybe not majorly called out, this has definitely been referenced and implicit.

If we move quickly, we could possibly save 3 weeks of liquidity rewards for future allocation, definitely 1 week, probably 2 weeks. At 3 weeks, this would be about 150k BoU YAM, or 750k YAM approximately $550k. To save the maximum possible, we would need to turn off rewards by the end of this week’s cycle, executing a governance proposal by 8PM UTC on Saturday, October 17. So governance proposal submission by 8AM UTC on Thursday. This would be possible with a Snapshot vote Tuesday (tomorrow) that reaches positive quorum in 24-48 hours.

The main motivation in doing this is to be really deliberate about how we’re using our 925k in liquidity incentive rewards. This number would remain the same, so its not about changing the rewards protocol participants could get, but shifting when they would get them.

Especially while the market is not in YAMs favor, it doesn’t make sense to be paying for the liquidity we need in positive rebases. Best to incentivize when we expect higher demand. In a similar vein, it may make sense to have lower rewards in the beginning of the YAM/ETH pool – in the process of this analysis now – currently offering 170% APY in these pools which seems very high when the protocol is not benefitting

1 Like

when [YAM/ETH Update]

Only for the people who aren’t fast enough sell first, or for the LP providers that are too slow to remove liquidity.

This is going to set a bad example for the future.

毫无意义,不管从市场和营销来说都不好,进入流动性池的,本来就有很多人是无奈的选择,虽然我没有