First off, thanks to the @TheRealTuna for taking the action and writing this up! Here is my feedback with a bunch of research I’ve done.
I want to provide some high level context for everyone thinking about this.
- Our current daily POOL emissions is 2,800 that just over 1 million POOL per year. So at this rate, we would deplete the treasury in 5 years if we kept it up (treasury has a bit over 5 million POOL right now)
- For a useful comparison point, the Compound protocol distributes 2,312 COMP per day. I think this is a good comparison because COMP and POOL have the same total supply (10 million) and about the same amount in their treasuries.
That gives some context for how much POOL we have and how much we are currently distributing. Next, to evaluate this proposal, it’s worth restating what the purpose of POOL distribution is, two things:
- The first purpose is to distribute control of the protocol. Ideally, to people who are interested in controlling the protocol for the long term. Not simply claiming and selling POOL.
- The second purpose is to use the incentive of POOL distribution to help bootstrap the network effects needed to become the largest no loss protocol in the world.
So does this proposal help us achieve these goals?
Based on an analysis of the top 10 largest depositors in the POOL pool, none of those accounts are selling the POOL they are accumulating. This evidence indicates that increasing the drip to these depositors will help us achieve goal 1. However, it does not directly help with goal 2 because it does not directly make the other prize pools grow or bring long term value to the protocol.
In contrast, looking at the top 10 depositors in the Dai prize pool, 7 out of 10 of them are selling all the POOL they receive. These depositors are helping us achieve goal 2 but not goal 1. (analysis here).
Ideally, changes to POOL distribution should be focused on the best ways to achieve goals 1 & 2 at the same time. Increasing the POOL pool drip potentially helps us achieve goal 2 by increasing the incentive to hold POOL but in my view it’s unlikely to make an impact (the number of people who are dumping at 7% APR but not dumping at 14% APR is probably small).
In summary, I support this proposal because I believe it is a small but solid step to
- improve the incentives to hold POOL and
- give more POOL to people who are long term aligned.
However, I think this is only a small step and likely insufficient, because it doesn’t help us with goal #2 of POOL distribution and it also moves us in the wrong direction in terms of total daily POOL distribution.
Ideas:
As stated, I’m supportive of this proposal already but I also want to throw out a few more ideas:
- I would consider decreasing other POOL distribution to keep the same net daily emissions (decreasing the Dai pool makes the most sense to me).
- I think the change to dripping pPOOL instead of POOL would likely be most effective at meaningfully aligning the two goals of POOL distribution
- I would consider adding a reserve rate to the SUSHI prize pool of 25%. Assuming we will want to add POOL distribution when the SUSHI distribution ends in 10 days, we might as well set that now.