It’s been over two weeks since new POOL distribution rates went into effect (May 25th). As such, I think now is a good time to evaluate their impact. I’ll look at their impact across our key metrics (Total Deposits, *Total Prizes, Unique Depositors).
POOL distribution to the USDC prize pool was decreased by 39%. Since then, total USDC deposits have INCREASED by 35% and unique depositors have increased by 15%
POOL distribution to the Dai prize pool decreased by 70%. Since then, total Dai deposits decreased by 22% and unique depositors increased by 1.8%
POOL distribution to COMP was cut by 80%. Since then, deposited COMP increased by 1.7%. Unique depositors increased by 8.1%
POOL distribution to UNI was reduced by 80%. Since then, deposited UNI (units, not USD value) has decreased 10% and unique depositors has increased 1.7%
*I’m not addressing reserve growth or prizes generated since in this case those are only impacted by changes in the underlying yield source.
Overall, I’m very pleased with the impact of these changes. We are distributing far less POOL while getting more deposited value than previously.
I’m quite surprised that we did not see much larger drops in deposits and in hindsight it seems to be clear that we were allocating too much POOL to liquidity incentives. The prize pool that saw the largest draw down in deposits was Dai but even the 22% draw down is far less than the 70% reduction in POOL distribution. A few other things I think are notable:
My biggest surprise is that yearn has continued to aggressively yield farm the protocol. I expected them to significantly draw down their deposits. These reinforces to me that we need to focus POOL distribution on “sponsorship” and not on “deposits” in order to get larger prizes to relatively smaller depositors.
I am very surprised that the non-stablecoin pools (UNI and COMP) kept such a high deposit value with 80% reward reductions. It seems doing a small POOL distribution to some of these non-stablecoin, low yielding assets can be a good way to bring more people to the protocol.
I’m encouraged that across the board, the number of unique depositors continues to increase despite there being some reduction in deposited value.
Hopefully these insights can help inform the next round of optimizations for POOL distribution. Would love thoughts or analysis from others!