PTIP-50 POOL Liquidity Management Fei Deal + Incentives Extension
Simple Summary
Proceed with FEI and Ondo proposal by funding $1.5MM USD equivalent in POOL tokens for 3 months.
Extend UNI LP rewards by 3 months and reduce to 150 POOL per day.
Extend POOL pool rewards by 2 months.
Motivation
1. FEI-ONDO Liquidity-as-a-Service (LaaS) Program (see Leighton’s original FEI proposal that was widely supported PTIP-45: Fei / Ondo LP Partnership)
A low cost way to increase liquidity on UNI V2 while accruing a projected 105,704.217 TRIBE in rewards for participating in the first three months of the program. Fei Protocol would deposit 1.5mm FEI that would be paired with $1.5mm in POOL to create deeper liquidity on Uniswap V2. Participating in this program would add TRIBE to the protocol treasury with the update of earning additional interest if the program is successful. This will be a great partnership with Fei Protocol, a leading protocol who just so happens to have recently approved a merge with Rari Capital.
2. UNI LP rewards extension and reduction.
UNI LP rewards are set to expire in 8 days. Given that we are adding $3MM in liquidity via the FEI-Ondo partnership, we believe it is reasonable to reduce UNI POOL ETH LPfrom 200 to 150 POOL per day and extend for 3 months. The UNI POOL-ETH pair is the most commonly traded pair and we should continue to maintain that LP while rewarding those aligned LPs. We would consider 150 POOL per day to this LP to be a good mid- to long-term rate.
3. Extend POOL pool rewards for 2 months.
POOL pool rewards are set to expire in 24 days. This pool is used for voting and should continue to be rewarded. We do advise that the community reduce these rewards once we have established some layer 2 POOL pools that are receiving rewards.
Rationale
This is the next phase of POOL liquidity and it will double our current liquidity. We are taking measures that will reduce our liquidity incentives spending and maximize the benefit to POOL token holders. POOL token holders can continue to earn POOL in the LP and the POOL pool with layer 2 options soon to be added to the mix. The FEI deal is very favorable to both sides and will allow us to grow our relationship with a protocol that can not only help deepen our liquidity but also potentially give us options for collateral listing in the future. While PoolTogether explores DeFi 2.0 liquidity options, it’s important to think of the bigger picture of liquidity for the POOL token as we build a clear path forward that will allow for deep liquidity and low POOL emissions.
Technical Specification
Transfer of 214,000 POOL to 0xDa63D70332139E6A8eCA7513f4b6E2E0Dc93b693 (executive team multi-sig). Executive multisig to fund the Ondo vault with $1.5MM in POOL tokens.
Transfer 9,000 POOL to the POOL pool faucet. This will extend those rewards for 45 days. This will make it so it ends at the same time as the LP rewards.
Extend POOL LP rewards by 60 days (9,000 POOL at rate of 150/day)
Status
Moving to governance vote soon after posting
Proceed with FEI deal and Extend pPOOL + LP incentives?
I support all the above… I would consider though keeping the LP rate at 200 instead of 150. Just my two cents. 200 per day isn’t a huge amount and I don’t think reducing LP right now when POOL price is low makes a ton of sense.
The POOL pool drip expires in 24 days. That means any replacement would need to be voted in starting in 17 days (basically right between Christmas and New Years). Given this, I think it’s pretty unrealistic that we will have a revised tokenomic plan in place before the POOL pool distribution ends.
I think letting the POOL pool distribution end with no immediate available alternative is not a good idea as that is where all of the most long term aligned holders are staked.
I actually mostly agree with you but think we should extend for 2 months so that we can conduct a deeper analysis on the grand scheme of tokenomics. Including a drastic change to POOL pool in this vote could make the other time sensitive portions of this vote fall through.
I am fine with either 150 or 200 POOL as LP incentives, perhaps you are right and we could just extend to allow time for deeper analysis.
I think letting the POOL pool distribution end with no immediate available alternative is not a good idea as that is where all of the most long term aligned holders are staked.
Incentivizing users to enter a prize pool that will be shortly de-listed doesn’t make sense to me. The deposit and withdrawal costs are so prohibitive only larger depositors will be able to enter and take advantage. After which we’re not guaranteed they’ll migrate to the new staking system.
I don’t see a major problem with cutting that emission off. True long-term holders will continue to hold, and more flakey holders will get shaken out.
That’ll give us more POOL to feed the transition to the new system.
I would like to see this extended until a new solution is in place. I would hope POOL holders have a say in whether POOL pool will be delisted or not. If it gets delisted without a clear plan in place I would not be very happy. If the only plan is to instead sell POOL for more stablecoins then I have some concerns. I don’t think a solution will be her in 23 days, 3 months will fly by and hopefully we have a better plan for the POOL tokenomics by then. Treasury Working Group can help with that.
Also, we are not increasing incentives, so I don’t really see us getting a bunch of new depositors.
I’m not a huge fan of continuing the LP rewards because I feel like we need to get LPing on other chains preparing for tokenomics and governance outside of Mainnet. But we need a deadline that’s more comfortable.
This more comfortable deadline is the only reason I’m okay with pumping the POOL pool full. Aligning these deadlines makes almost too much sense to ignore it, and under the current timeline the vote would be too close to the holidays to risk anything productive happening.
Thank you @TheRealTuna and likely the TWG peeps for giving us a reasonable timeline to figure out POOL tokenomics and also allows us to enjoy the holidays and new year.
Update: Was just clarifying the technical details and we will need to use the Executive multisig to fund this. At the end of the term it requires claiming tokens and redepositing into a perpetual. This proposal will now transfer the POOL to the executive multisig. Multisig will take it from there.
For POOL holders, the pPOOL is quite popular. A large portion of the circulating supply is staked and it is the home for some 1900 unique depositors.
That being said the pPOOL has governance issues
Not reaching quorum
200k POOL can cast weight of 1 million POOL
4 person multi-sig facilitates the vote
I think we all would like to see these conditions improved. Let’s fire up a thread on how to do so.
The other common issue I notice people attributing to the pPOOL is often referred to as “inflation”. In my opinion this sounds a lot bigger than it is. For perspective, let’s consider selling ALL of the rewards for one month, 6000 POOL. Doing so would currently result in a 4% price impact. Of course not everyone sells, and certainly not at once. It’s not much “inflation” in the grand scheme of things.
I think we all look forward to better governance mechanisms, and bigger use cases for the POOL token. But until we have those I believe it’s imperative to continue to support our long-term aligned participants as they have come to expect.