[AIP-4] Redirect All Emissions on the alUSD Staking Pool to the 3CRV Pool

Nyyls

scoopy Even though I'm in this pool rn I'd be ok with alcx only get a small cut too and to cut the alusd rewards. We only need to promote what's good for the health of the project!

111altrekt

After a careful review of the proposal by scoopy, i am now 100% convinced it's the right thing to do, with respect to ALCX decrease to 19% by 1% and alUSD to 0.5%, anytime we're ready for vote, we'll be ready:::

anon3469

I'm in favor of it. Well written proposal! Makes complete sense!
Thanks for that

ElB

I agree with @ButlerAndTheThirdStringers, moving 2.5% from ALCX to 3CRV makes sense and provides more rewards to the degens enabling a foundational component of the project. I don't understand the rationale for cutting alUSD rewards, alUSD holders are providing value to the project through funds deposited or liquidated.

If we are making adjustments, I think the ALCX direct staking rewards are too high in comparison to SLP, SLP carries much more risk but only holds a 50% premium (currently 9%/week vs 6%/week). Whereas staking alUSD direct actually benefits the project, the only benefit to staking ALCX is incentivizing people not to directly dump ALCX after it being farmed. Being an ALCX holder I'm happy the price is not seeing large crashes, but I'm also starting to view my SLP risk as less attractive and moving to a stronger direct ALCX position with the current rewards structure. If we are going to adjust, I think we should also make a slight adjustment to ALCX direct to SLP rewards as well, as SLP is much higher risk and adds much more benefit to ALCX holders. Recommendation is slight variation of Bulter's:

Increase 3CRV by 2.5% and SLP by 1%, coming from ALCX direct. New rewards:

61% SLP
20.5% 3CRV
14.5% ALCX
2% alUSD

RogueItachi

I like scoopy plan here. Especially when we get the transmuter farming, there are going to be a lot of people who want in on the protocol and a lot of new alUSD minted. We want them to have as much of a liquid market as possible to show how awesome and seamless this protocol is. As Butler mentions, if they happen to self-liquidate like true degens to ape harder into those higher rewards, then that will help both the 3CRV pool get more liquidity and the transmuter for farming. I don't think the ALCX only pool pay cut will do any real damage. It's healthier to incentivize that 3CRV pool at this point.

chillsauce1

I like bingos proposal. Staking alUSD is kinda useless.

RogueItachi

I'm going to amend my first response. I would prefer the weights to be:

60% ALCX/ETH SLP
19.3% ALCX
20.5% alUSD-3crv LP
0.2% alUSD

This would still increase the incentives for the 3CRV pool, yet retain a little more rewards for the ALCX believers than Scoopy's plan. I would think most people are going to use the 3CRV pool if they want to farm with their alUSD because of the much higher rewards, and if not, they will trade alUSD for another stable regardless. The 3CRV liquidity is more valuable than solely holding alUSD in my opinion. And when new uses for alUSD come out, like maybe a Fuse pool or integration with other protocols, people could swap back to alUSD or yeet into the vault more to have alUSD to use in these other projects. The first option could build an alUSD premium and the second will give us more in our vaults and increase our TVL.

metaregular

as a noob who appreciated the alUSD pool at first, when the rewards were cut the first time I forced myself to learn how to deposit into the CRV pool. If I were a new noob coming in I wouldn't want to deposit my money in the alUSD pool and then learn latter that it wasn't capital efficient. I'd rather the protocol remove that decision for me and force me to use the pool that was most productive to the protocol.

Beeptalk_Feld

I don't see the rush in lowering the AlUSD rewards. Since AlUSD isn't very liquid, it gives someone a reason to experience the actual use of the protocol in a profitable way. If this proposal were to pass, I think it should either be gradual, or announced alongside some other things users can do with their AlUSD, imo.

daidai

While I very much agree that making sure we maintain the really good liquidity on the 3CRV pool is extremely important, having an alUSD staking pool with decent rewards helps keep a good portion of those out of the 3CRV pool and contributes towards maintain a healthy ratio of alUSD to other stablecoins in the pool. If we were to see a significant price drop in ALCX, leading to a drop in yield to alUSD3CRV LPs, people would start pulling non-alUSD stablecoins and the ratio could be in danger of putting alUSD significantly below the $1 peg, since even with the transmuter giving out DAI 1:1, there's still an opportunity cost associated with having to wait for it. I don't think it's too farfetched to think that it could trade at like $0.95 or something like that in such a scenario. This would obviously be pretty bad, as it makes it even less likely for other protocols to adopt a supposed $1 stablecoin that consistently trades below the peg. This is why I think just removing all the rewards is too risky while we're still in the early stages and lack adoption of alUSD. Once there's an actual demand for it besides farming the rewards can probably be phased out safely though.

I'm not opposed to reducing the rewards though, but I'd like to err more on the side of caution and keep at least 1% for it. I'm also not opposed to slashing some of the ALCX-only pool's rewards, so with all of this in mind, I would rather see the following distribution:

60% ALCX/ETH SLP
19% ALCX
20% alUSD-3crv LP
1% alUSD

toast

I'm personally not in the alUSD only pool but it currently has the benefit for people to enter and exit easily since we can't withdraw from the alUSDCRV pool to single asset (yet). Though tbf, we probably dont need to adjust for people exiting the system.. unless we are confident that the alUSD is is being used elsewhere.

SathFenrir

So I caught up and my stance is to incrementally disincentivize the alUSD pool until it is eventually fully phased out. Most of the proposed weights are good options, but we should view them as temporary and aim to have further votes on another re-allocation of weights.

D - (Scoopy's choice) Reduce alUSD weight to .5% to boost crv, while also reducing ALCX-only by 1%
ETH-ALCX sushi pool : 60%
ALCX-only staking : 19%
3CRV-alUSD pool : 20.5%
alUSD pool : .5%

stuntnuts

I’m in favor of a systematic decrease of rewards over 6 weeks. One thing I find in the crypto-farming space is that decisions are taken too quickly giving the impression that these systems are haphazard and cannot be relied on for responsible money allocation. Given the recent exposure of this project on outlets like Delphi Digital and the other podcast, many people will be currently doing research to learn about the platform and its opportunities. To just quickly change the farming pools overnight would give many would-be investors pause and make them reconsider the seriousness of the project. By releasing a 6 week plan to decrease the rewards and phase out the pool, it gives a stronger impression that this is a level-headed and maturing community.

anon3469

scoopy Happy to get your feedback on this. Yes it makes sense. Although I'm staking ALCX I'd rather lower the APY to prevent farm and dump and incentivize the 3crv pool instead.

seanmc-eth

scoopy I support scoopy's proposal and would even be in favor of cutting the ALCX only pool rewards even further (possibly even to 10% and splitting the cut amount 50/50 to go to the SLP and CRV pools?). I think that funneling as much liquidity to the LP pools as possible is ultimately what is best for the protocol and is the best way to incentivize long term investment.

Chop

Adding my Discord thoughts here too for a more structured approach:

AIP4 is def interesting and I'm all for @scoopy's allocation of cutting it down to 1%, or 0.5% if necessary - disclaimer: I'm large in the 3CRV pool myself.

I don't see too much impact going on there when that's done, as both the alUSD & 3CRV pool seem to be mirroring each other in terms of APY since the start (a bit off at the very start due to minting cap). Aside from external factors, I'd expect the same to happen when that re-alloc is made, with a part of alUSD moving to the 3CRV pool and a part staying, balancing out APY again.

Money locked in alUSD doesn't really provide any utility to the Alchemix Ecosystem afaik, aside from being a bit more noob-friendly which is arguable as acquiring that alUSD isn't noob friendly to begin with as it's only reasonably paired on Curve, which is as scary as it gets for new-to-DeFi people to use given its' terrible interface.

An additional thought I had overnight and I'm unsure if that fits the discussions around AIP-4, is to remove total rewards from alUSD (or 0.0000000001%), and instead add an additional pair with the same allocation for DAI/alUSD Sushi-LP.

That way we'd provide actual value to the ecosystem by:

Bootstrap liquidity on a more normie-facing exchange in preparation for higher utility of alUSD
Liquidity Integration on popular aggregators (1inch, Matcha, etc)
Recognition of stable-volume from data aggregators (i.e. Coingecko)
Additional hidden yield for SLP stakers coming from trading fees without much IL risk due to deep 3CRV pair guaranteeing peg through arb

Reeserj

Would it be possible to build a "migrate alUSD staking" button that would migrate staked alUSD to the newly incentivized pools/LP Positions

magicianEX

I do not agree that alUSD pool rewards have to be reduced as staking alUSD directly benefits the community as EIB mentioned. We do not want a situation where people aren't holding on to alUSD and later have to bump up the alUSD rewards again. Not forgetting the 3CRV is predominantly made of up larger whales, any adjustment to reduce alUSD is a self fulfilling prophecy only decided by the whales and existing majority in that pool. Minorities have little say.

The current AIP updates are constantly about reward changes and makes the project appear amateurish. LPs are constantly having to adjust their allocation and waste ETH on high gas. Improvements on protocol innovation, security, partnerships would be more important to prioritize as the space is moving very fast. My proposal:

61% SLP
20.5% 3CRV
14.5% ALCX
2% alUSD