Below, you will find a draft proposal aimed at optimizing and scaling the sdCRV liquidity. We eagerly welcome your feedback before we proceed with this crucial initiative :
This proposal aims to establish a scalable approach to gradually increase the sdCRVCRV liquidity pool on Curve. It involves optimizing the voting process and fee structure as follows:
Utilize sdCRV tokens within the sdCRVCRV pool on Curve to vote for the sdCRVCRV pool, considering them as non-boosted (voting power = amount of sdCRV in the Curve pool * minimum boost).
Introduce a 10% fee on the Curve native yield (currently 3CRV) that will be used to allocate vote bounties on Votemarket specifically for the sdCRVCRV pool when liquidity is below the targeted amount (target 10/90 : see below).
This approach ensures that the sdCRVCRV liquidity pool grows over time and scales in alignment with the growth of the CRV Liquid Locker.
Background and Motivation:
Over the past three months, the CRV Liquid Locker has experienced remarkable growth, with the veCRV locked increasing from 25 million to 45 million. However, the sdCRVCRV liquidity has remained stagnant, with 2,500,000 million sdCRV and 1,500,000 CRV inside the Curve pool.
Previously, the ratio between CRV inside the pool and sdCRV inside the sdCRV-gauge was above 10-90. Currently, the ratio has shifted below 5-95. Consequently, this proposal aims to optimize and scale the sdCRVCRV liquidity to address this discrepancy.
To optimize the sdCRVCRV liquidity, we propose utilizing sdCRV tokens within the sdCRVCRV pool on Curve for voting purposes. These tokens will be considered as non-boosted, resulting in the direction of 870,000 veCRV votes towards the sdCRVCRV pool.
With the current amounts of 1,500,000 sdCRV inside the Curve pool and a minimum boost of x0.58, this will effectively increase by 60% the CRV rewards sent to the sdCRVCRV gauge, aiming to restore the desired 90-10 ratio.
This approach establishes a positive flywheel: as the sdCRV inside the sdCRVCRV pool increases, the pool receives more votes, facilitating the scaling of both the CRV liquid locker and the sdCRVCRV liquidity.
It’s important to note that this optimization has a limited impact on the APR of the sdCRV-gauges’ voting power, reducing it by only 1 point.
Additionally, as the sdCRV inside the Curve pool increases, the Curve native yield (currently 3CRV) for sdCRV-gauge holders will also rise. To support this proposal, a 10% fee on the Curve native yield (currently 3CRV) will be introduced, allocating vote bounties on Votemarket specifically for the sdCRVCRV pool when liquidity is below the targeted amount (target 10/90).
With the existing amounts, this will result in an additional 500,000 veCRV votes gathered towards the sdCRVCRV pool, aligning the growth of the CRV liquid locker with the sdCRVCRV liquidity.
- Implement both options
- Implement sdCRV voting only
- Implement 3CRV fee votes bounties only
- Do nothing