This proposal is to continue POOL distribution to governance managed prize pools at a reduced rate. If not passed, POOL distribution will completely stop on May 26th.
The initial POOL distribution period has been quite successful in
- Generating ~$200,000 in weekly prizes
- Growing AUM to ~$230 million
- Growing reserves by $75,000 - $150,000 weekly (depending on interest rates)
However, since this POOL distribution was set before the POOL token was issued. It has never been optimized using the real world data we now have. The initial POOL distribution was outlined here and was designed to distribute 5% of the total supply over 14 weeks.
This proposal continues POOL distribution at a substantially reduced rate. The goal of this proposal is to optimize POOL distribution to generate the largest prizes and getting POOL into the hands of long term aligned community members.
- Extend POOL distribution for 14 more weeks at the following rates
- Reduce USDC POOL distribution from 2,295 per day to 1,400
- Reduce Dai POOL distribution from 2,295 per day to 700
- Reduce COMP distribution from 255 per day to 50
- Reduce UNI distribution from 255 per day to 50
- Increase LP reward distribution from 300 to 500 POOL per day
Overall, these changes reduce total daily POOL distribution by 49%. Maintaining these rates fo 14 weeks will distribute a total of 274,400 POOL. It should be communicated that we expect POOL distribution to continue after those 14 weeks but there may be modifications to it.
There are many variables involved in setting POOL distribution rates so it’s impossible to fully know what the impact will be. However, a few over-arching ideas guided our thinking.
- POOL distribution had to be slowed for the simple reason that it began with a VERY fast distribution rate. The initial distribution rate was optimized for getting as much POOL as possible into the hands of the community (5% of total supply over 14 weeks).
- The yield rates on assets are highly varied. Targeting high yield assets with POOL distribution leads to larger prizes and faster reserve growth. Targeting low yield assets helps grow AUM but doesn’t contribute significantly to prizes.
- POOL distribution is equal across similar asset types (stable coins both get the same rate) this fragments prizes and prevents the growth of really large headline prizes ($1 million per week).
With these high level ideas we landed on the following parameters
- A total 49% reduction in POOL distributed per day
- The largest cuts 80% were to the non-stablecoin prize pools which have the lowest APRs and therefore smallest prizes
- USDC receives the highest allocation of 1,400 POOL (2x that of Dai) this creates a clear favorite pool that can be the primary entry point to new depositors and also provide the highest headline prize.
- An increase in LP incentives to POOL / ETH holders of 200 POOL (500 per day instead of 300 per day) which should incentive healthier liquidity for POOL
It’s worth noting a few things this proposal does not do.
- The proposal does not re-allocate any POOL specifically to incentive sponsorship over deposits. This has been a popular idea as a way to have less whales win prizes but it was deemed too big of a change to implement right now alongside the other changes.
- This proposal does not change pool reserve rates. It was decided it was best to address this separately.
This proposal exceeds the current 10 transaction limit of proposals, so it will be split into two parts:
Part 1: Reduce Drip Rates
Part 2: Deposit more POOL