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