Happy Friday! It’s time again for the weekly update from Llama DAO.
This week, the Working Group has been finalising our report and the Recommendations section. All of our findings have been included in the report; the final changes and Recommendations section are being completed at this time, and we have concluded our POOL Drip Analysis.
Because interest was expressed last week in the prize pool deposit lockups for a higher allocation of rewards, I’ve included an excerpt that reviews this design feature:
Prize Pool Lockups, Longer Distribution Periods
When a user deposits funds into a prize pool, their assets are subject to a timelock. The timelock ensures every user contributes the same amount of interest to prizes they are eligible to win. The current goal, as stated in the PoolTogether 3.0 documentation, is to minimize the timelock for any user. However, the reason the timelock exists is to create a sense of fairness within the protocol. The community could extrapolate the fairness principle from initial deposits to POOL drip as well.
Augmenting current POOL drip using an approach similar to BarnBridge’s SMART Yield Reward Program to offer a greater share of rewards to dedicated users willing to lock assets into a prize pool for a set period of time. Rewards would accrue using a time-in, value-out model, where value earned is segmented based on the asset’s timelock.
Adding a time-in, value-out feature to the prize pool design could help separate casual depositors and users farming POOL from long-term users of the protocol. Currently, POOL distribution is set for 14-week periods. If users were able to lock deposits for a definite period of time and have POOL drip rewards vest, the protocol could reward long-term users and minimize the impact of users who farm and sell POOL. Below is an example of how such an approach would work using the current USDC POOL drip rate:
To prevent users from abusing the system, the protocol could require that deposits remain locked for the full period in order to claim rewards. If withdrawn before the pre-selected date, then the rewards accrued default to 10% of deposit as if no lock had been placed on the assets.
If the goal of POOL drip is to convert protocol users to active community members, then a lock-up mechanism would further that goal. POOL farmers would have their earnings reduced by 90% unless they lock up their deposit for the duration. Extending the rewards period to 26-weeks or 52-weeks could further reduce the effects of farming, though longer lock-up periods could be seen as prohibitive for some users.
We will share the full Llama DAO Treasury Report on Tuesday (9/7).
Past Llama Treasury Updates
Llama Treasury Update (8/27)
Llama Treasury Update (8/20)
Llama Treasury Update (8/12)
Llama Treasury Update (8/6)
Original Proposal | PTIP-26: Llama PoolTogether: Tokenomics Research and Exploring Alternative Capital Structures