• AIP

  • [AIP-24] Incentivisation of the Curve alETH pool

0xFelix One other thing to consider is that there have been a lot of complaints about the high rate of ALCX inflation within the community. With Saddle pools Alchemix has to provide 100% of the incentivization to attract liquidity (since Saddle does not have a token)

I hear this for sure re: inflation, and think it's a question of timing. Worth pointing out that Curve's emission rate is dropping.

0xFelix On a personal note, I would also say that I see a lot of developments in the Curve ecosystem (Convex, veCRV bribing, Votium)

... ditto on timing here.

      Does this mean eth yield will be roughly cut in half?

        taylor_eth
        The liquidity will also be split among 2 pools instead of one. So for example, if both the Saddle pool and Curve pool now get half of the current rewards, but half of Saddle's TVL moves to Curve, the yield will stay equal on both. Over time I think the market will balance out the TVL on both pools such that the yield will be roughly the same.

          I think it would be good to get more activity on Curve. They can do more for Alchemix than Saddle can. I don't like all the fragmentation of ALCX rewards. I get the idea of being loyal to Saddle but it's perfectly normal to move rewards from one vault to another, even if to an LP competitor. We owe it to the stakeholders.

          I do think that the Curve pool needs to be incentivized and I believe that the incentives should be monitored and adjusted at a later stage according to the TVL in order to achieve a target ROI in both pools. We coulds start with the 50/50 split proposal and move from there.

          Honestly I was a little torn at first glance, but I talked myself into it with some of the points others have made also.

          On one hand fractured liquidity isn't ideal, on the other Curve is so established and integrated into defi that it's kinda silly to not have an alETH presence there long term.

          Looking at just the 24hr volume on saddle, we did $521k. Directly comparing to curve that would be the 26th pool by 24hr volume (3rd for ETH specific pools). I'm sure if we were deployed on curve, they would quickly do more volume than saddle

          In addition, by splitting the ACLX rewards in half, we would still be pretty competitive for the top APR/Y on curve for ETH pools (roughly tied with stETH). That should serve to attract liquidity and incentivize higher volume traded as well. Plenty of people will ape into whatever the best APY is.

          Once Curve/CVX rewards come into play, we'd be by far the most profitable ETH-pegged pool.

          On a tangent that might not make much sense (haven't gone deep into Tokemak yet). If our vote goes through on that proposal and we end up working with them for bootstrapping liquidity, is it viable to have it deployed in the curve/saddle pools? Or is that not how it works?

          Edit: I believe scoopy has long-standing relationships with the saddle team (sorry if i'm misremembering). If this picks up steam maybe he would be able to keep things tight with them.

          Personally, I'm a big advocate for building long-term partnerships in the space as much as possible. The better integrated we are in terms of the protocol and community, the more treacherous a moat future copy cats will have to cross. I'd love to keep things good with Saddle (we did launch a hyped product exclusively with them) but, practically, curve is a much bigger player if there does need to be an either/or in the future.

            I do understand the logic of being "loyal" to Saddle, and I think we should continue to incentivize that pool. But we also need to think about the longer term future of Alchemix. Is having the relatively unknown Saddle, as our only official place to swap alETH a good look for us? Given how large the ambition of Alchemix is? Surely we aspire to be highly liquid on major DeFi platforms, to continue to grow the brand, and be taken seriously?

            Getting a liquid alETH pool on Curve is pretty much a no brainer. The fact that the liquidity for alETH is on a protocol many DeFi users won't have heard of will be a big turn off to attracting new users. It also likely restricting the pool liquidity from growing, as some LPs might not trust/be comfortable with Saddle, due to unfamiliarity. This is of course great for those of us farming right now, as it keeps APRs high. But it is potentially unnecessarily strangling us from growing the overall protocol further.

            I agree that fractured liquidity is maybe not ideal at this stage, but it's worth the trade off for establishing a presence on Curve. It's highly likely that over a short time, the Curve pool will grow larger than the Saddle pool. And thus, regardless of how we split the rewards, I imagine pure ALCX APR will eventually settle at a much higher rate on Saddle, than on Curve. Saddle would provide the best straight up ALCX yield, while Curve would provide a mixture of ALCX / CRV / CVX yield.

            I understand not wanting to "betray" Saddle, who helped us out in a tight spot, but we also have to think about the big picture, and getting alETH onto Curve is pretty much essential to grow the protocol, and expand our brand into the big leagues.

            hekmat

            very much in favor of continuing pool incentivisation with saddle. they were good to us when we were in a pinch. the fractured liquidity will ultimately be good for LPs in the long run because there will be more trading fees coming from arbitrage. even if we cut rewards in half and split them with the curve pool, we are still incentivising each pool with ~$150k worth of ALCX a week.

              Do we have to split it with Saddle? Why not from alcx/eth? I already pay a lot to harvest my rewards from saddle, now I would have to redeploy plus pay fees from two places everytime I harvest.

                crip_toed You wouldn't have to redeploy if you don't want to. You can simply stay in the Saddle pool and continue your harvesting as you do currently. This proposal is to create a 2nd market/pool for alETH/ETH that will help with liquidity on the long-term. But as an LPer you don't have to be in both pools, you can simply leave your funds in Saddle or choose to move over to Curve. Both will be viable options.

                    0xFelix but if you split the rewards, my rewards will be cut in half if I stay in saddle

                        crip_toed Not if half of the total liquidity moves over to Curve, which is what I expect will happen.

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