This is being posted as a request for feedback before formal submission as a proposal
YAM FAM Improved LP Incentives
Incentivize YAM liquidity providers over a longer time period while avoiding overpaying for liquidity—and creating unnecessary downward pressure on the YAM price—in the first few weeks after launch.
YAM payments to incentivize liquidity providers in the YAM:yUSD Uniswap pool will be distributed according to the following schedule:
- 92,538.3 YAM to be paid to liquidity providers in the first week;
- The amount of the incentive to decrease by 10% in each subsequent week.
If this payment continues indefinitely, the total incentive paid to YAM:yUSD liquidity providers overall will be 925,383 YAM. This is the same LP incentive total as proposed in the YIP-15 amendment.
YAM is a long-term experiment, and YAM incentives should be designed to support the goals of the YAM platform over the long term.
The liquidity provider incentives proposed in the YIP-15 amendment start far too high, distributing 30% of the LP incentive pool—almost 10% of the current YAM supply—in only the first week. This dilutes current YAM holders, overpays for liquidity, and puts unnecessary downward pressure on the YAM price.
By stretching the liquidity provider incentives over a longer period of time, liquidity can be incentivized over a longer time period and unnecessary downward pressure on the YAM price can be avoided.