We propose including the v2 strategies in the liquid lockers UI, and create gauges for each strategy so that the community can vote on incentives over the full scope of what is offered by the protocol.
We also suggest killing incentives for the two Polygon strategies.
This aims to avoid useless inflation and limiting manual tasks linked to inflation updates for v2 strategies, hence pushing further the decentralization of the protocol.
Auto-compounded strategies from Stake DAO v2 are still relevant since they offer an automatic compounder of the safest pools for the main assets which are USD and EUR stable coins, ETH and BTC. However, there are currently two conflicting inflation frameworks which would gain from being synchronized. V2 strategies receive a share of v2 inflation proportionate to the revenues generated (except Polygon strats and Frax strats for which it is too complicated to change inflation on a regular basis). On the other hand, Liquid Lockers and their strategies receive the inflation as a result of a weekly on-chain vote. There are two votes: one for the lockers, and one for the strategies.
The idea of this proposal is to include the v2 strategies and NFT incentives inside the LL strategies gauge controller, so that the inflation can be managed fully on-chain by the community.
Furthermore, the team has had difficulties maintaining the incentives on the two Polygon strategies, due the the fact that it needs a lot of complex manual work (needed notably for calculating, bridging the assets, updating the Polygon Masterchef contract, etc.). Moreover, those two strategies saw their yield shrink significantly during the past months, and are no longer bringing any fees to the DAO. Since the beginning of 2022, the Passive USD Strategy generated $9,410 in performance fees, and the Passive BTC strategy $752. It is much less than the amount of incentives that have been sent to those strategies to keep our Polygon users happy.
It therefore makes sense to cut the incentives towards those strategies that require a lot of manpower and do not generate anymore revenues.
This will also massively increase the decentralization of the protocol and the ability of the team to focus on building high value-add products.
This proposal suggests pursuing the following actions:
- Kill inflation in the masterchef for all strategies and for the NFT staking
- Set to 0 the reward rates of the Polygon Masterchef
- Create a gauge inside the Liquid Locker strategies’ gauge controller for the following strategies:
- Passive steth strategy
- Passive ETH strategy
- Passive BTC strategy
- Passive EURO strategy
- Passive USD strategy
- Add Frax’s gauges for sdFRAX3CRV and sdETH-fraxput in the Liquid Locker strategies’ gauge controller
- Create a new contract for NFT staking and add the corresponding gauge in the Liquid Locker strategies’ gauge controller
- Decentralizes further the protocol by reducing off-chain computation and empowering the community
- Provides value to veSDT as it is now able to also vote on all inflation allocation of the protocol
- Less manual work for the team which can focus on development
- Progressive migration of the full stack towards the new UI
- Reduces risk of error regarding inflation and NFT staking
- Reduces unproductive inflation
- Users will need to lock and vote to make sure v2 strategies keep receiving incentives
- Can lead to less attractivity of v2 strategies
- Will probably lead to lower TVL cross chain
Human resources: For points 1-4: one day of developer work. For point 5: 3 weeks of developer work.
Treasury resources: No treasury resources needed
Admin: veSDT holders
Community feedback: 2 days minimum
Voting Duration: 8 days