Summary
Decrease CVP inflation by decreasing the mining rewards in existing pools. There are 3 rounds of decreasing inflation. Note, that current CVP inflation from liquidity mining programs is 2.545 CVP/Block.
- Round 1: starting 26th September to 25th October inclusive ( 30 days ) to 1.5 CVP/block
- Round 2: starting 26th October to 24th November inclusive ( 30 days ) to 1.1 CVP/block
- Round 3: starting 25th November to 25th December inclusive ( 30 days ) to 0.8 CVP/block
Motivation
PowerPool undergoes the transformation according to the new vision. The current Liquidity Mining program provides too much inflation for CVP and it looks not reasonable taking into account the new upcoming product line. As an introduction to this proposal, letβs explore the current rewards structure:
Table 1. Current CVP rewards for existing pools
*YLA generates ~18% APY in USDC from Yearn Vaults not related to the CVP LM program
So, current inflation from the CVP LM program is about 497k CVP per month, $705,000 in USD equivalent. Also, we need to take into account that there are other sources of inflation as well - testersβ vested tokens, multi-sig payments, Power Agent rewards.
YLA consumes 150k CVP rewards per month (less than β of overall rewards size) while providing 62.6% of PowerPool TVL; YLA: $14,975,000 TVL, PowerPool $23,923,000 total TVL. Sources: https://defillama.com/protocols/indexes and https://powerindex.io/#/mainnet/
So, it is evident that the current LM program is inefficient and should be revised. It is necessary to preserve CVP value, limit inflation, and use CVP holdings belonging to the DAO more efficiently.
My proposal is to decrease CVP rewards in three rounds (see specification below).
Specification
I propose to update the liquidity mining program and set up the following rewards starting from 22 Sep 2021. The presented numbers were defined based on PowerPool aims:
(1) Acquire TVL into YLA, based on high USDC APY + CVP boost opportunity
(2) Slowly but surely deprecate legacy pools
(3) Have the opportunity to allocate saved CVPs to new products and PowerPools deployed to other networks (via separate proposals).
Also, one of main points was to maximize rewards for CVP holders (CVP boost) and CVP-ETH LPs, while decreasing rewards for product users.
Note, that APY numbers are very approximate since it greatly depends on CVP/USD exchange rate. It means that these APY can be several times higher if the CVP price goes up.
Table 2. Proposed CVP rewards for existing pools from 26th Sep by 25th Oct
Table 3. Proposed CVP rewards for existing pools from 26th Oct by 24th Nov
Table 4. Proposed CVP rewards for existing pools from 25th Nov by 25th Dec
Also, my thoughts regarding yield generation in PowerPool:
- Any product should generate solid APY not based on CVP emission. YLA is a great example of this approach. The next product expected to deliver this is BSCDEFI with ~40% APY projected from staking pool assets
- xCVP should become one of the best opportunities to earn CVP by staking CVP, additionally to current CVP boost programs.
The advantage of both options is zero CVP inflation.
Conclusion
I propose to revise the CVP liquidity mining program with the aim to decrease inflation and provide βroomβ for possible future rewards for PowerPool new products (via additional proposals). The current 2.545 CVP/block rate should be decreased to 0.80 CVP/block in 3 months.
