Proposal 51: Update YLA and CVP-ETH CVP liquidity programs

Summary

Continuation of proposal 47 to decrease CVP inflation. This proposal is simply continuing where that proposal left off because the last round specified ends on the 25th Dec.

Motivation

Not much needs to be said, most of it was covered in proposal 47. There is simply more new CVP entering the market vs how much CVP is being bought, which must be rectified.

YLA inflation has not been decreased for 2 months when it should have been gradually decreased, which is why the current schedule proposed is critical. And for CVP-ETH the impermanent loss is quite tragic so continuing to support it seems wise. The YLA cut may feel quite drastic but it is long overdue and don’t forget that xCVP is the aim of where we want users to earn CVP rewards, so you can still farm CVP.

Table 1. Current CVP rewards for existing 2 pools (Only YLA and ETH-CVP pools have inflationary rewards)


Specifications

Table 2. Proposed CVP rewards for existing pools from 26th Dec to 24th Jan CVP rewards for existing pools

Table 3. Proposed CVP rewards for existing pools from 26th Jan

Conclusion
Keep in mind the ultimate goal of this proposal: We want the CVP ecosystem to have a positive feedback loop for the community and the project. Especially YLA has been great for those who want to non stop farm CVP but creates a lot of selling pressure and ultimately it harms CVP price which is already quite poor.

xCVP is the positive feedback loop where the tokenomics are healthy and users are still rewarded in CVP. We want to shift to this mechanism for those who want to earn that juicy CVP. And xCVP is already available on PowerIndex.io, so go stake!

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Thank you for your proposal. I agree that CVP reward should be cut down, but we still need some incentives to attract investors depositing in YLA. I don’t know whether zero reward is a good idea.
BTW, As gearbox is about to launch, maybe we could cooperate with gearbox about YLA? Just my opinion.

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Perhaps you are correct. But i think if there is a reward for YLA, it should not come at the cost of CVP inflation :frowning: It just results in more farming and selling pressure and benefits only those who farm the new CVP.

I think without CVP rewards YLA is still attractive for those who want a genuine risk free stable income. Especially with the incoming bull period I believe YLA will do well without CVP rewards. And those who aren’t interested in a risk free income and only interested in CVP can join xCVP :slight_smile: Those interested in both can enter both xCVP and YLA. Ultimately xCVP will benefit the community as a whole, farmers and the token itself.

I agree hopefully gearbox and PowerPool can collaborate, I wonder if YLA can be integrated that would be awesome

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I would leave the YLA farm if CVP rewards were eliminated. I’m already sacrificing APY to have a non-managed stable farm and without CVP the APY would not be attractive enough to continue using YLA. If the buying pressure isn’t strong enough for CVP that’s where proposals and the focus should be. Instead of focusing on: how do we prioritize speculators while alienating the people actually using our product.

While I certainly agree with the idea of reducing CVP inflation, I personally know multiple people who will leave PowerPool if the added benefit of YLA’s CVP rewards is completely removed. Given 100% of my small sample size would leave (excluding myself), I can only assume there will be many others who leave as well. What is the incentive to stay invested in YLA without those additional rewards when you can find LPs on other chains that a) offer significantly higher APY and b) are much cheaper to transact on?

With PowerPool looking to expand to other chains in the near future, demand for CVP is increasing (just look at price action), and inflation should be less of a problem. I really like the idea of elevating xCVP as a positive feedback loop within PowerPool. If rewards are not removed, I’d love to see a feature to “Claim and Reinvest” farmed CVP directly into the xCVP pool. Not sure if there would be a way to save on gas fees and do this in one transaction, but a feature like this would elevate xCVPs visibility in the UI and make it easier for users to reinvest. But I digress.

My main concern is that a significant portion of YLA investors might leave if rewards are completely removed, and since YLA is the majority of PPool’s TVL by a large margin, it could have a significant impact on TVL which is not a good look.

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agreed completely emm. disabling rewards before powerpool is able to release its pools on other chains seems completely short sighted.

If YLA token allocation were being actively maintained/improved to continuously track the best yields from Yearn, I think that it would be pretty valuable in its own right and might be worth staying in even without the CVP incentive. Thats the product vision, I think, and its a good one.

Unfortunately, the team does not seem to prioritizing improving Yearn vault-hopping strategies used in YLA and getting the best possible yield, so YLA has basically become a glorified USDN Yearn vault. CVP is a nice sweetener that makes it worth investing in YLA, but w/o that I fail to see why I would’t just invest directly in Yearn instead.

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I second the fact that the strategy needs to be upgraded - this could be a great product if it did more hopping across more pools and take out USDN as eligible, as I think that it’s been struggling to hold the line. I think there are other pools that give similar yields that are probably safer, and ideally it should be a broader basket.

Overall, I think all of you are discounting the Zap feature which socializes the heavy gas costs of going in and out of Yearn pools. I think if team can address the point about USDN being overly represented, I would be using this as a cash reserve more often, as the costs of zapping in ten times are about the cost of going into Yearn once.

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Agree on the value of the ZAP feature. But the product on the other side of the ZAP also needs to be compelling to realize that value.

Fantastic to see alot of input. I can totally understand the POV of some of the comments that say they will leave as soon as cvp rewards are decreased for YLA.

But those comments just goes to further show me that the YLA cvp reward system just isnt going to help this protocol in the long term or short term. Because why?

Because the respective commenters have no vested interest in this project and will drop it at the sight of higher apys as they say. Fair enough, but who bears the burden of this? Those of us who hold the cvp token. And it just snowballs further and further.

This is not an attack on anyone here at all, I am just stating it is diminishing returns for the protocol to keep inflating the token. I want something sustainable and realistic. Clearly YLA isnt serving its true purpose if it continously needs cvp rewards forever to justify people using it.

Further to that some points have been made about optimizing the yield generated by YLA. It certainly should be upgraded which could make apy better as well. This should seriously be looked at, by those in the dao that are knowledgable and should be ACTIVELY managed. This could help satisfy some of the concern raised. It would be awesome if there could be some offset where yla apy could be increased while cvp rewards are decreased.

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@Defly respectfully - I feel like you’re ignoring that YLA accounts for 14 million dollars of powerpools 17.5 million TVL. if that money leaves CVP inflation is going to be the least of powerpools issues. Also - we use the product. We deserve to earn voting rights on it.

If powerpool can optimize the APY while reducing CVP? Great. I use YLA because I don’t have to manage it and save gas. But there are now more options on different chains.

There’s a difference between “We’re inflating the token” (which is why rewards were decreased, which I agree with) and “YLA shouldn’t produce CVP”.

Leave the reduced rewards as is and see how the new products on different chains effect the market. I also feel like we’re being reactionary to a choppy crypto market. Sure - CVP whales probably want to see less CVP in the world - but I think it’s going to be short sighted if they give no incentive for people to use the products.

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@Defly I am a bit taken aback by your comments:

But those comments just goes to further show me that the YLA cvp reward system just isnt going to help this protocol in the long term or short term. Because why?

It seems to me that the rewards have successfully attracted users. Now would be the time to build out the product into something that actually provides sustainable value (such that subsidizing users is not needed). Either that, or give up, I guess?

Because the respective commenters have no vested interest in this project and will drop it at the sight of higher apys as they say. Fair enough, but who bears the burden of this? Those of us who hold the cvp token. And it just snowballs further and further.

I mean… you hold the CVP token (“burden”) because you expect it to 100x when the protocol is a runaway success, right?

As you say, “Clearly YLA isnt serving its true purpose if it continously needs cvp rewards forever to justify people using it.” I agree. But the larger question is really how you (as a CVP holder) see that happening? Presumably you believe in it or else you wouldn’t hold the token. But if I were you I think think I’d be more concerned with how to get the product into gear (i.e. so it actually can stand on its own without being subsidized) rather than the short term stock price…

As @adapunks says it’s hard to see how any of it makes any difference if the users walk away.

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As many have stated here - it’s become pretty clear that strategy within YLA pool has become subpar and little innovation has occurred. I’d imagine people would feel better about holding CVP if they felt there was material work being done on the core strategist side.

WRT tokenomics - why not just implement a vesting feature for earned CVP? At a minimum if would reduce sell pressure immediately and allow people to be at least somewhat longer-term oriented (could test with 3 month linear vest or something short). Think this solves both problems without alienating all of TVL.

Just pointing out there is already a 10 week delayed vest. It’s not a great feature (as most alternatives don’t have this). But making it longer would be a significant disincentive to use the product.