With the success of the Olympus Pro bonding program, it is time to make some adjustments to the emissions weights for ALCX going forward. This proposal will outline the changes and rationales for them.
Currently, the farming emissions are weighted as follows:
ALCX/ETH SLP - 40%
alUSD3CRV - 10%
alETH saddle - 3%
Bribes for alETH and alUSD - 12%
ALCX - 15%
tALCX - 5%
Olympus Pro - 15% (5% each to ETH, DAI, and ALCX/ETH SLP)
The proposed changes to the emissions weighting would be this:
ALCX/ETH SLP - 40% => 25%
alUSD3CRV - 10% -> 0% (made up for with extra bribes)
alETH saddle - 3% -> 2%
Bribes for alETH and alUSD - 12% -> 13%
-alUSD 6% -> 7%
-alETH 6% -> 5%
-d3 1% -> 2%
ALCX - 15% -> 10%
tALCX - 5% -> 10%
Olympus Pro - 15% -> 40%
-ALCX/ETH SLP 10%
For the ALCX/ETH SLP, there is plenty of liquidity relative to market cap and volume. Furthermore, ALCX is listed on all of the major exchanges now, so there are plenty of viable options for traders and hence a reduced need for DEX liquidity. Reducing the farming weights from 40% to 25% would mean less liquidity or lower APR for farmers, but even if some liquidity leaves, 25% of the farming budget should still be plenty to support our main market.
For the ALCX and tALCX pools, they are roughly the same in terms of capital efficiency, however for tALCX, the more ALCX locked in Tokemak, the better. The tokemak staking system scales rewards with TVL, so the more ALCX in Tokemak, the more TOKE rewards will go to tALCX holders. By shifting away from the ALCX pool to the tALCX pool, we can acquire more TOKE for the DAO, which will be strategically important later on when tokemak is fully operational.
The alUSD3CRV pool currently gets both gauge bribes and ALCX rewards. The math shows that bribes are at least 3x more efficient compared to direct incentives. Therefore we will terminate direct rewards and only use bribes for the alusd3crv pool. The bribe amount will be slightly adjusted upwards compared to before, but the overall amount of ALCX being spend on this pool will be reduced from 16% to 7% of total emissions. The up and coming d3 pool is looking to expand from the FEI and FRAX teams, who will increase their bribes and start doing Algorithmic Market Operations (AMOs). This proposal will authorize us to use 2% of emissions for d3.
For the alETH LP pools, we have too much liquidity compared to volume, so we will slightly adjust the emissions down for both pools. Saddle alETH is going from 3% to 2%, and Curve alETH bribes are going from 6% to 5% of total emissions. In total, alUSD will receive 9% of incentives, and alETH will receive 7% of emissions. In total, 25% of the emissions budget will be shifted from our LP positions to bonds.
Lastly, With Olympus Pro's success, we will expand on the bonding program. Currently, 15% of emissions go to DAI, ETH, and ALCX/ETH SLP bonds, split equally. Going forward, 40% of the budget will be spent on bonding. ALCX/ETH SLP will be doubled to soak up more of the exiting liquidity from the weights adjustments. DAI and ETH will remain unchanged. The remainder of the bonds budget will go to CVX. Our alETH pool currently has 712m locked into it and it received 1.35m CVX votes. That equates to $527 of liquidity per CVX vote, which currently costs $28. For purposes of sustainable liquidity, it makes more sense to actively acquire CVX than it does to acquire more DAI and WETH. This would mean the DAO would accumulate 30k CVX a week. If so, 30k * 527 (the amount liquidity per CVX), we can sustainably incentivize 15m of additional liquidity per week (and 18x more efficient than sourcing the liquidity directly via Alchemix DAI and WETH bonds). Long term acquisition of CVX is by far the most economical means to secure alusd and aleth liquidity sustainably.