Proposal 16: Reduce the mining rewards for all pools by ~50% for the next month

Proposals
1

The proposal is already live and you can cast your vote starting as of now
https://app.powerpool.finance/#/mainnet/proposal/9?governor=0x88a6cee103d03a3250db46982109cb7cb7bd8f98

The proposal is prepared and launched by @Sergey

Summary:

  1. Reduce the LM rewards by ~50% for all mining pools in January-2021
  2. Keep voting on the next month’s mining rewards for the next 3 months (incl January-2021) at the end of each month

This separate proposal is required as YETI pool rewards will be 0 next month if we don’t set it up

Abstract:

For the next 3 months which will be critical for PP development, I suggest ruling the LM rewards manually and see what gives results and what doesn’t give the results.

The main goal - don’t allow the overinflation of CVP and the price drop to go beyond the point of no return.

The actions proposed are SUPER SIMPLE (please see below the summary and specification)

As everything is pretty clear here and due to the urgency please see just brief facts below, would be happy to share more info on abstract and motivation at the end of the next month

Motivation:
Current rewards structure creates inadequate returns, CVP oversupply and deflates the value of CVP

  1. The team works on a new design of the mechanics behind the index
  2. The community is about to launch at least 2 indexes

Why should we keep having such enormous returns?

Either the product has its product-market-fit and TVL grows naturally or the product has failed and nothing helps in this case.
In both situations, artificial inflation should be implemented manually, not by default.

We are trying different ways of how to increase the TVL, and at the moment it looks like the CVP overinflation doesn’t work.

Please don’t forget that in case we keep these high returns and the price falls down due to overinflation (and looks like it will) the APY will decrease anyway

So I believe it would be better lower price and no inflation than lower price and overinflation

Specification:
The current pool rewards planned for the next month

PIPT (Staking + Balancer)
Month 1 rewards will be 1m CVP
Month 2 rewards will be 700k CVP
Month 3+ rewards will be 400k CVP

-> SET UP 500K CVP PER MONTH IN JANUARY

CVP/ETH Uniswap
Month 1 rewards will be 182k CVP (per week)
Month 2+ rewards will be 91k CVP (per week)

-> SET UP 91K CVP PER WEEK IN JANUARY (AS IS)

Proposal 12:
Month 1: Staking 200k + ETH/YETI balancer 250 (450k total)
Month 2: Zero

-> SET UP 300K CVP PER MONTH IN JANUARY (SAME PROPORTION)

1 Like
2

So the CVP/ETH rewards in January will be 91k per week as originally proposed by the team? And Yeti staking and YETI/ETH will be 300k per month for each pool? Do I get it right?

3

Thank you for prop.

Feels a little bit rushy: creat onchain vote right after creat topic.

Agree with motivation/

If i understand corretcly, the main point is price impact Current rewards structure creates inadequate returns, CVP oversupply and deflates the value of CVP, right?

Accordind to https://app.powerpool.finance/, in YETI mining staked: 98.16% of all lp tokens.
If we just drop rewards to zero in nearest future - do you belive that we still have good liquidity in balancer?

Other proposed parts in my opinion are worth trying.

2 Likes
4

yes correct.

But we are not dropping YETI

we are setting 30% decreased rewards (300k CVP per month)

5

Ok. Missread that part. :slight_smile:

6

“Feels a little bit rushy: creat onchain vote right after creat topic”.
It is, but someone started a fire last night & the longer we’ll let it burn the bigger the damege will be.

I think that one of the lessons from this shitshow is we (as a community) will need to formalize how proposales should be disscussed & afterwards submited.

“Current rewards structure creates inadequate returns, CVP oversupply and deflates the value of CVP` , right?”
I think there is another layer here, some thing none of us expected when we voted on proposal 6.
It seems oversupply of CVP has a negative affect on the project cure products, the indexes.

How the fuck someone can think its a good idea leaving this situation unchanged for the next 12 month is unclear to me.

2 Likes
7

After clear misunderstanding about YETI - voted FOR this prop.

1 Like
8

I am very much in favor of this proposal. This proposal will reduce inflation by over 700K CVP next month compared to Proposal 15 Version 2/3, which is a lot! Current rewards are very high, and I don’t believe we’ll see any significant drop in TVL if this passes since yields will still be very competitive.

2 Likes
9

And with reduced inflation (rewards), price might recover wich will porbaly offset part of the APY drop, we’ll just need to wait and see…
And BTW in real termes the APY is a lot “higher” than it seems.
Curently the price is ~1.8$ it was 3.9$ at 11/12 so APY basicaly 1.5x-2x higher in real terms.

@powerpoolAdmin or @DrGonzo can provide the DATA about RCS ,real circulating suplly (circulating suplly - vested token), & APY per day (even better if we can get per hour or block BC we’ll have more data points)?
It will help us gain some insghts on how APY, RCS & price interacting with each other.

2 Likes
10

valuable comments as usual

1 Like
11

Just writing it for future discussions…
It seems we stoped the bleeding (at least for now), bear in mind some of the rewards are still in vesting period we’ll need to keep watching how it will paly out.
But CVP stopped dragging the indexes (PIPT & YETI) down.
IMO although reducing rewards has it cons its lethal to have +400% APY when some projects offer +20,000% APY ATM (+400% mining rewards is not close to be enough of incentive).
The only outcome in this situation is a negative feedback loop.

1 Like
12

January is almost over so we need to get rewards renewed! Here are my recommendations:

  • CVP/ETH - Setup 91K CVP per week (consistent with current yield) in February
  • PIPT - Setup 300K CVP for February
  • YETI - Setup 175K CVP for February

I think CVP/ETH rewards should remain unchanged for at least 6 months, so I didn’t propose any changes there. For PIPT and YETI I recommend reducing rewards proportionately with the original schedule released for PIPT (proposed numbers rounded to be nice and even).

I could see an argument for reducing rewards slightly further to offset increased inflation due to rewards from ASSY. We could possibly trim another 50K-100K CVP out of this renewal proposal while still offering generous yields. For example YETI is yielding 250% at the moment, so even cutting rewards in half (or slightly more) would still offer a great return.

2 Likes
13

Thank you for bringing up this reminder, much needed.

250% is quite high for yeti actually. So think I am FOR the idea of trimming yeti pool.

pipt pool (currenlty at 95% apy) could be trimmed but at the same time wouldn’t be against keeping pipt rewards the same.

Uniswap pool should be kept the same in my opinion.

14

I completely agree with this. Im a YETI staker but the APY is too high.

Something we could change here is that you need to stake CVP to get any yield at all, like the assy pool is working. I would even start with the same rule so we have 1 rule for all pools and if we change that rule its applied to all the index liquidity mining programs (how many CVP you need to stake to earn rewards and the more you stake the more rewards you get).

That would be another advantage for the XCVP im proposing in another proposal. Only people who have skin in the game earn CVP rewards. Everyone else is just a token holder and if the person wants to farm yield they can go to the sushiswap onsen program as example.

2 Likes
15

But for ASSY pool you still get (relatively small) yield, with CVP gives a boost that’s bigger. Are you suggesting no yield at all if no cvp provided?

1 Like
16

No, i would just implement the same rule as we are having for the ASSY pool right now. Small yield without and the more you stake the more yield you will get. Then we dont have to define a complete new rule set right now.

But in the long run i would change that to 0 rewards to non cvp holders. But for that we should define 1 ruleset that works for all liquidity mining programs that we dont have different ones for different pools.

1 Like
17

I like this idea and I agree in the mid to long term requiring cvp for any yield seems very beneficial for the cvp-nomics.

ASSY pool has demonstrated that people are willing to buy cvp (that they may not have) for a higher yield. And as you suggest this works with the XCVP proposal.

Good stuff!

2 Likes
18

I would suggest YETI pool even 150k for February. I.e., half of what it is now (300k). I would then suggest the CVP/ETH pool is increased for selfish reasons - the IL on this has been ridiculous unfortunately. Maybe to 120k :smiley:

1 Like
19

I like the idea of adding the CVP boost to other pools but I think that’s worth a separate discussion just in the interest of time - I would hate to see rewards on current pools lapse right now.

@125125 I appreciate the honesty in your reasoning ( :grin: ) but I don’t think we can justify increasing CVP/ETH rewards right now. At 200% APY your earned rewards will equal your principal in about half of a year. Rewards on this pool will likely stick around for a while to support CVP liquidity, so I wouldn’t get too hung up on making a knee-jerk reaction to short-term volatility.

Reducing YETI rewards by 50% to 150K/month would put the Balancer LM returns at 115% APY based on current yields which still seems like a great return, so I’m supportive of that number.

I’d be curious to hear more thoughts about PIPT rewards. The Index COOP DPI farm has retained $50M in TVL despite only offering ~30% APY right now. Based on this I’m convinced we could drop PIPT rewards by 50% to 250K/month without seeing a big drop in TVL. Anecdotally I feel like January’s reward reduction didn’t cause people to exit the pool (though it’s hard to conclusively say due to price volatility, people taking profits, ASSY launch, etc.).

1 Like
20

I agree lets get this proposal out there. I am lp too its definitely pretty bad, barely getting an fees for being an lp and impermanent loss is crazy, cvp is doing terribly against eth.

That being said i am fine if rewards stay the same i hope that cvp will perform and make up for this.

Im also in pipt pool and yes i would be fine with the 50% cut. Same 50% cut for yeti too.

If we don’t get this out there and voted on we will end up with 0 rewards.

2 Likes