Summary:
Discussion about the current issuance of SDT tokens and its distribution ratio between LP providers and strategy users. This is more an open discussion rather than a formal proposal.
Abstract:
Motivation:
Currently the issuance of tokens is pretty high: 5 SDT/block, around 33k tokens per day, ~more than 1% of the MC added each day. 50% of the issuance goes straight to the strategy users, artificially increasing their yield in an insane way (majority of the yield comes from the distribution of the SDT token and not from the strategy itself). While this is good to attract new users, it also puts quite some sell pressure and LP providers have to support the dump. The current situation is that strategy users make comfortable and low risk benefits while LP providers take the risk and do not get that much additional gains (122% on the eurs strategy vs 258% for LP). With a rough estimate, it even appears that anyone entering the LP after the first two weeks, has, at current pricing, a loss or a small gain.
While the SDT single stacking might improve the situation, here are a few ideas that could also help attracting long term users and balance things a bit:
- Partially locked rewards, similar to what Sushiswap does
- Exponentially decreasing or flexible (based on MC ? on current yields ?) issuance
- Issuance over a longer period
- Offer locking with different periods (and different yields) for single side stacking
I’ll be adding more ideas to the list as they pop up in the discussion.
One additional point that directly has to do with token issuance and market cap, is the current supply. Apparently 42M token have been minted with the majority currently in the reward pool. According to the medium post, the final supply will be 100M tokens with 40% to the contributors. When and how will the remaining 58M token be minted ?
For:
- Reduce pressure on price and on LP
- Slowly move to a sustainable yield and growth
Against:
- We may lose some users aftert lowering the incentived yield
