[FIP 009] - Rewards for Phase 4 (III)

[FIP 009] - Rewards for Phase 4 (III)

Float Protocol has continued to distribute BANK to the community since the beginning of our democratic launch in early February 2021. As Phase 4 (II) is drawing to a close we thought it best to re-evaluate the pools, and their respective rewards going forward, especially considering FLOAT has now been in circulation for almost 10 weeks. The auctions have seen recent uptake in participation with bots now roaming the scenes and taking profit where they can. Liquidity is an important factor for the functioning of the Protocol such that traders can arb the auctions, let us discuss how to reward both BANKsters, FLOATers and liquidity providers alike.

Following discussions with the Community on Telegram and the #governance channel on Discord, below is a summary of points made alongside some other ideas from the core team:

  • Prioritise liquidity provider pool rewards, and rank them in terms of asset volatility
  • Keep BANK-ETH going
  • Keep FLOAT-ETH going
    • Potentially dual rewards for FLOAT-ETH n.b. FLOAT-ETH will first have to get on Sushi Onsen
  • Introduce a new FLOAT-usd e.g. FLOAT-FRAX, FLOAT-USDC… pool
    • Can be done via a Uniswap v3 + Gelato
    • Could bring new people to the FLOAT ecosystem and aid price stability
  • Exchange the Genesis BANK pool for a BANK-only pool with different lock ups and incentives.
    • N.B. Some have asked to scrap the Genesis BANK-only pool completely.
    • There is the danger that removing it completely could lead to large short term volatility in BANK
  • Replace the FLOAT-only pool with a FLOAT-usd pair pool

    let FLOAT float freely
    - a fellow Community rockstar

  • Gradually decrease the rewards overall such that the Protocol has enough BANK to incentivise partnerships with other platforms but make sure the rewards are juicy enough to still reward long term supporters of the Protocol in the meantime.

The core team are leaning towards the following set up:

  • BANK-ETH (with dual rewards, Sushi)
  • FLOAT-ETH
  • FLOAT-FRAX via Uniswap v3

It would be great to hear thoughts from the Community on what the rewards and pools should be going forward.


Edit:

Move to vote on Snapshot: Snapshot

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I don’t understand why we’d do a FLOAT-FRAX pool. It’s a competing algo stablecoin based on the USD. Why not just stick to FLOAT-USDC to get more adoption? I do like that idea because I think more people will participate when they can more easily compare float prices to USD.

I’d also suggest pushing for duel FLOAT-ETH rewards through sushiswap by getting on onsen (like BANK) and programming such that we can double up the rewards by staking the staked coins. That’ll only make it more attractive.

I’d leave an attractively rewarded BANK only pool that people can put their rewards into. The current Genius rewards haven’t increased because people haven’t withdrawn from that pool. How about just allowing more BANK to be deposited there and increase the rewards so they’re attractive enough to get more BANK locked. That with a more rewarded BANK-ETH dual rewards pool on sushi should keep BANK more stable so it’ll not drop so much by attracting liquidity miners and dissuade non-bot arbitragers from immediately selling their BANK. Short of that the only other way to get the BANK price to grow will be to finally attach basket rewards to it via more FLOAT usage and therefore a higher basket factor. That will also reward those of us that have been holding purchased BANK through it’s more than 90% drop, taking large real losses by buying into the protocol.

I agree FLOAT-USDC only makes sense at this point especially with the growth of USDC this year alone!

Scraping the BANK only pool will only add more sell pressure which we certainly do not need at this time.

Yes please, to this. :point_up:

I agree with adding Float-USDC as well.

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maybe FLOAT-FRAX can attract some FRAX holders and cooperate with them?

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FLOAT ETH and BANK ETH should be default pools. I can see much more marketing traction with FLOAT USDC rather than FRAX. In the future, when fiat depreciation accelerates, a FLOAT alt Algo Stable Coin pair would likely have marketing demand. Not yet.

I understand the rationale behind keeping the BANK-only pool (so that nobody sells). Would there be any positive reasoning to have rewards in the BANK-only pool with FLOAT instead of more BANK? This goes in hand with the consideration that the BANK-pool can become something akin to a ‘savings account’, and that you will stop further dilution of BANK.

Heck, you can make all of your rewards emissions in FLOAT by simply stopping all BANK emissions (with the exception of perhaps the FLOAT-stable pool), purchasing FLOAT for new rewards with the BANK saved. You would want to have more adoption of FLOAT, right?

Just a thought.

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I support trying to get FRAX token holders involved. Support the broader ecosystem and bring visibility to FLOAT and BANK.

Interesting point. Could linking with the FRAX Community lead to new additional people entering the FLOAT ecosystem as the FRAX Community is used to the concept of partly-collateralised algo-stables?

Hey @JohnWinstonL definitely agree with most of your points here. A few ideas that came up for me:

  1. One could argue that a FLOAT-FRAX pool would have less utility than a FLOAT-USDC pair, if the aim is to bring veritable decentralization to stables. USDC is likely going to maintain its relevance in DeFi because of USD denomination and USD collateral, which makes it more or less the best DeFi collateral for speculators and USD-denominated traders. FRAX is another algo stablecoin with a similiar product/market fit to FLOAT, admittedly with a few prominent distinctions in the proportionality mechanisms, making an immediate FLOAT-FRAX pool redundant from a go-to-market perspective. As we see more adoption occur for both FLOAT and FRAX over time, I’d say that it is a natural pair to add to boost utility.

  2. Dissuading BANK dumps is an important point right now, and something I’ve been thinking about a lot more deeply with this proposal. I agree with @fasterdriving that there will be an interesting growth factor for BANK via FLOAT usage —> higher basket factor. However, I’m really not sure that increasing rewards at this point will help stabilize BANK price.

  3. Overall, I like to think adoption of FLOAT is the main goal and I’d suggest making decisions/considerations based on this premise. Definitely lots to still discuss, looking forward to seeing this conversation evolve.

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Hey @Lior :wave: , welcome to the Community.

I think that these are all great points. On the topic of BANK dumps, the current APY on Genesis BANK actually matches that of BANK-ETH due to its locked nature. Completely scraping it may lead to a fair amount of unrest but replacing it with a lower APY BANK-only pool could be an option, just thinking along the lines of @arcology in terms of reducing dilution (but still rewarding in BANK rather than FLOAT - although I’m not completely against that idea either, I see where you are coming from.)

Yea I’d be very interested in looking at the lower APY BANK-only pool option. I agree that completely scraping it at this point in time might be a bit brusque. Interesting thoughts from @arcology about rewarding FLOAT as a “savings account” element to BANK holders. I wonder how we could implement something like that sustainably, and whether you had any additional thoughts on this @JohnWinstonL :slight_smile:

Rewards in FLOAT is something more likely to happen with well supported basket, or via redeeming a bond. The latter is an idea we have been playing with for a while, see a link to @paulm 's post here. :slight_smile:

Do rewards end today for FLOAT-ETH sLP? If so should we vote to top off if these are being extended?

  1. Dissuading BANK dumps is an important point right now, and something I’ve been thinking about a lot more deeply with this proposal. I agree with @fasterdriving that there will be an interesting growth factor for BANK via FLOAT usage —> higher basket factor. However, I’m really not sure that increasing rewards at this point will help stabilize BANK price.

I’ve been very active in Defi for some time. What initially attracted me to BANK was the high interest rate on sushiswap. That led me to further explore the protocol and jump in, though probably too early with BANK. If we want to increase FLOAT and BANK interest we can attract Defi people with a high interest rate and prevent them from dumping through a difficult and long claiming process. That’ll attract individuals like me to the protocol and those that’ll check it out to stay to “bet” on growth in the protocol by the higher interest rates and longer hold periods.

A BANK only pool is needed to allow “pure play” people to bet on the long term growth of this project. A long exit period will keep only the people who are long term in as the rest will be afraid of the protocol collapsing while they’re stuck in it.

Finally, I think we should save reward pools like FLOAT-FRAX for projects that we partner with and that somehow can promote FLOAT usage or rewards. Things like rewards are scarce resources so I believe we should save them for things that add value to the project.

@fasterdriving Completely understand your point here, a recent Bankless article describes DeFi as “a crucible of competition for capital efficiency” - I would also add competition for rewards, you and I are both well aware.

While high interest rates often draw people in, I’m far from certain that rates only are what’s keeping people in those protocols. Once you’re in, things like shared values, growing use cases, and governance become a lot more important. I’m almost sure that just boosting APY on those pools wouldn’t fix the issue, but only make it easier for traders to dump.

Longer hold periods are actually an interesting prospect that we could potentially envisage, but making the claiming process “long and difficult” would go against much of what DeFi stands for right now, as well as the ease of use and good UX that FLOAT should be shooting for.

I definitely agree that rewards should be used sparingly to attract more use cases and prioritize utility. I would think it sensible to consider a USD-collateralized stablecoin as a new FLOAT pairing, which should kill a few birds with one stone in terms of APY, utility, and fair rewarding.

This is the purpose of the discussion. To gather new ideas and move to a vote rather than just topping them up after a vote with similar rewards like last time :slight_smile:

So far the consensus here and on the discord has been:

  • FLOAT-ETH
  • FLOAT-USDC
  • BANK-ETH
  • Potentially keep BANK-only albeit with reduced rewards

Now we should start throwing numbers on the board in terms of BANK distribution for each pool :slight_smile:

What I mean by “long and difficult” is simply to lengthen the hold time with no rewards on the Bank only and maybe other pools. Defi is about bouncing around but we don’t want bouncers to join anyways. Long hold periods, large rewards on all pools should attract people to “check out” the protocol and do their proverbial “homework” and learn what FLOAT is before they jump in. Isn’t that what we want for greater FLOAT adoption, more sophisticated people to learn about FLOAT? We can play around with the hold periods and reward levels to determine what’s optimal to lock BANK so it doesn’t deflate. To that end I’d suggest a 30 day lockup period with no BANK rewards on the BANK pool, and 10 days on the other pools. Reward levels should be attractive to keep people betting long term for the project, especially with the long hold periods without rewards (I do think that they should continue to get sushi rewards and liquidity rewards during that time, and maybe have an option where they can take out their liquidity faster BUT it’ll cost them all of their BANK rewards if they do. That’ll be less scary for people to hop in since their principle isn’t in danger from the lengthy lock period.) I’d recommend we target 50-75% bank rewards on all pools with a 10 day lock period where they can remove their principle early but lose their rewards if they do, and 100% on the BANK only pool with a 30 day lock. I’d also recommend that we run this for a short period so we see how this goes and can adjust as needed. Maybe we can run it for 30 days with a commitment that we won’t revise down the pool rewards without a 10 day warning and the BANK only rewards without a 30 day warning for everyone that get’s in during the Phase. That’ll also encourage people to get in early and figure things out.

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Okay so it seems that there are some ideas on what pools to incentivize. To discourage dumping I would suggest increased rewards (wait for it, explained below) on the BANK-only pool with a longer vesting duration.

If you wanted to incentivize the 4 pools:

  1. FLOAT-ETH
  2. FLOAT-USDC
  3. BANK-ETH
  4. BANK-only,

Then I think most of the rewards should be at FLOAT-ETH because this is where you get people into the ecosystem. FLOAT-USDC would be interesting because you are trying to get others to off-ramp from the big players and into FLOAT, while I would suggest BANK-ETH be incentivized by Sushi (and/or very low level of BANK, but I do not recommend this), because that is your exit liquidity pool.

Now, for BANK-only, my proposal is to view this as a fixed term time deposit-like savings account which has upside from eventual BANK token appreciation. In this aspect, I actually suggest rewarding users in this pool with (generous) amounts of FLOAT so that they can further lock BANK into this pool. BANK dilution would be slowed, more FLOAT could be minted from locked BANK. You could set the rewards vesting epoch to be 14-days, 30-days or 90-days with increasing amount of FLOAT reward (like the time deposit).
From the comments above, if there is still a preference to reward BANK in this pool, then I also second that this would have the least amount of BANK reward and the longest length of lockup.

Give the users bank for their BANK…!

Couldn’t edit my previous post.

Would you also consider FLOAT-DAI to capture more stables?

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