BIP 61. Emissions: 12 Week Liquidity Mining Program

Category: Emissions
Scope: Badger and DIGG Sett Emissions for the period before Convex Setts Launch and for 12 Weeks After.
Status: Accepted: Snapshot

TL;DR:

  • Stay on the 22nd-week schedule before Convex Launch
  • Gradual emission reduction schedule for DIGG
  • Keep the same level of rewards as the 22nd week for:
    • Badger Native Setts: bBadger, Badger LPs on Uniswap and Sushiswap
    • Sushi Setts: ETH/WBTC SLP, ibBTC/WBTC SLP
  • Boost the Rewards for Convex Setts for the 12 Week Liquidity Mining Program, gradually reducing them from 3x to 1x throughout the Program as a substitute to the Launch Boost.
  • Halve the rewards for byWBTC Sett and keep them on this level for the duration of the Program
  • Introduce the Rewards for BadgerDAO Convex Helper Vaults (CVX and cvxCRV)

Overview:


BadgerDAO is preparing to migrate our Curve Setts to Convex and launch five new vaults there.

At the same time, the 22 Week Liquidity Mining Program is about to end.

Convex Launch is a big opportunity for BadgerDAO to increase its market share and further advance itself as a go-to place to park your Bitcoin in DeFi.

Convex rewards scale.

This means that if we bring in a lot of liquidity there, the underlying APY of our Setts will grow with time, as more voting weight will go towards the underlying liquidity pools.

In the future, CVX will be used for voting on gauge weights on Curve.

With the strategy of accumulating interest-bearing Convex tokens in the DAO treasury and distributing them to our users, we will increase the DAO voting power in the Convex governance, which will bring more yield to our core Setts in the future.

Before Convex Launch I suggest keeping the same schedule as this week, the last week of the 22 Week Liquidity Mining Program.

With the Convex Setts Launch, I propose to initiate the following schedule:

Specifics:

The transition period between the two liquidity mining programs.


This Thursday, the 22 Week Liquidity Mining Program comes to an end, and Convex Setts will be launched when everything is ready and good to go with at least a 24-hour notice.

Between this Thursday and the Launch date, there will be a period when the old Liquidity Mining Program comes to an end, and the new one hasn’t yet started.

I propose to keep the rewards at the same rate as this week, which would effectively be the vote for no change in this case.

Due to the time constraints of this governance decision and the fact that it’s relatively small, a snapshot to prolong the emissions for the transition period will be posted simultaneously with this BIP going live.

Keep this week emission schedule until the Convex Setts Launch
  • Yes
  • No

0 voters


This is another attempt at exploring flexible decision making by the BadgerDAO governance.

An alternative to that would be for the decision to be voted on by the Badger Council - or made by the core team. Please share your feedback on what option you prefer in this situation and why:

  • Do an immediate token holders snapshot vote
  • Badger Council voting on the decision
  • the core team making the decision
  • Other (specify in the comments)

0 voters

DIGG Emissions


The main goal behind gradual emission reduction, introduced with the 22 Week Liquidity Mining program, is to arrive at sustainable emission rates.

I believe a good metric to assess that sustainability is the Yearly Rate of Supply Spending.

As an example, on the first week of BadgerDAO existence, it emitted 603,750 Badger, which translates into 31.5 Million Badger Yearly Emissions, or roughly 150% of the total Badger supply.

Here’s how this number looks historically and for the proposed 12 Week Liquidity Mining Program:

Evidently, DIGG still hasn’t arrived at a sustainable rate of emissions: the entire DIGG treasury would be spent in a year at the current rate. Thus I believe a further emission reduction and the development of more effective supply spending solutions are needed for it, like the revamped DIGG options.

Approve DIGG Emissions Schedule with gradual weekly reduction at a 6.11% weekly rate
  • Yes
  • No

0 voters

Badger is in a better position regarding this metric, and this allows us to boost the rewards to our Setts, bring more liquidity to Convex and Curve, and capitalize on the opportunity to Boost the long term underlying rewards to our core product.

Convex Setts rewards schedule and Boost.


Convex rewards scale.

More Bitcoin liquidity on Convex means that it will be generating more CRV for the platform, and thus a higher relative gauge weight will be assigned to Bitcoin liquidity pools by Convex in the following Curve gauge weight vote.

This, in turn, will feed into more CRV earned by the platform and a higher relative weight in the next vote.

On top of that, CVX is rewarded to liquidity pools pro-rata to CRV generated by the platform.

So with time, provided the liquidity stays, CVX and CRV rewards to the pools should be increasing.

Another feature of Convex is that all harvests are being streamed to active participants in the pool over a 7 day period from the moment a harvest was called, which creates some delay in receiving the rewards when new liquidity joins the pool.

In order to accommodate for these features, I suggest a prolonged rate of elevated rewards to Convex pools with a gradual reduction rate as a substitute to the standard launch boost structure.

The proposal is to launch with 3x the rewards, and gradually reduce them towards 1x at a 9.50% weekly reduction rate.

When it comes to individual Sett rewards, I suggest:

  • keeping the same base rates for the old pools,
  • adding large new vaults (hbtc, bbtc, tricrypto) at a 1x multiplier (similar to renBTC)
  • adding smaller vaults (oBTC, pBTC) at a 0.5x multiplier.
Approve the proposed schedule for Convex Setts
  • Yes
  • No

0 voters

Sushi and Native Sett rewards.


Emissions for Badger Native Setts and Sushi Setts are proposed to be on the same level as they are now.

Extend Sushi and Badger Native Sett Rewards on the same level as they are now for the duration of the 12 Week Liquidity Mining Program
  • Yes
  • No

0 voters

byWBTC Sett rewards halving.


The community has expressed frustration that byWBTC Sett’s performance thus far hasn’t been justifying the fees. As part of the preparation for the Convex Launch, there is a proposal to change the Fee structure that’s going to affect byWBTC withdrawal fees too, decreasing them from 0.50% to 0.20%.

When it comes to Curve Setts migration, that fee change is more justified for the DAO. The increased underlying APY in conjunction with the increased performance fee will cover the treasury inflow loss that comes from decreasing the withdrawal fee.

With byWBTC vault, there are not going to be these compensatory changes, at least immediately, and thus the vault cost-efficiency is going to drop.

While byWBTC Sett remains the core component of ibBTC and of the DAO vault product, we’re about to launch 7 BTC vaults on Convex, so it makes sense to spread the incentives around.

Thus the suggestion is to halve the rewards for byWBTC Sett and keep them on the same level (1x base multiplier) for the duration of the 12 Week liquidity mining event.

This would make the rewards similar to Sushi WBTC/ETH Sett.

Halve the multiplier for byWBTC Sett from 2x to 1x, reducing the rewards in half compared to this week - and keep them on this level for the duration of the Liquidity Mining Program
  • Yes
  • No

0 voters

Helper Vaults.


With Convex Launch, BadgerDAO will introduce two Helper vaults for CVX and cvxCRV.

Sett users will receive interest-bearing versions of CVX and cvxCRV that autocompound the rewards.

In order to add stickiness to these rewards within the app and provide a pathway to earn more Badger by keeping them, I suggest issuing a base rate of rewards to these tokens that gradually increases throughout the 12 Week Liquidity Mining Program.

The increasing rewards structure for Helper Vaults allows them to scale a bit better with the CVX and cvxCRV rewards that Badger Sett users collect.

Issue Badger rewards to Helper Vault tokens at a 0.20x multiplier, scaling them from 0.5x to 1x.
  • Yes
  • No

0 voters

Implementation:


As mentioned earlier, due to the time constraints around keeping the emissions going, the snapshot about the transitional period will be posted simultaneously with the BIP.

There will be considerably more time to discuss and vote on the other parts of the BIP.

If the governance approves the changes to the emission schedule, they will become active with the Launch of Convex Setts in the Badger app.

1 Like

Excellent BIP @Mr_Po and great progress moving forward.

1 Like

great BIP @Mr_Po . i do have a question regarding DIGG Emissions section. given what we’ve seen with DIGG the last couple months, does emitting any DIGG at all even make sense right now? sell pressure has been a recurring theme and the emissions in the form of DIGG don’t seem to be incentivizing any behavior to help DIGG find its natural market based equilibrium. Can we consider putting a stop to DIGG emissions entirely until the market demand has caught up with current circulating supply? ty

Overall in agreement on most of the BIP except for the elevated rewards to Convex pools, on top of the CVX and CRV rewards to those pools. The ROI will already be much better than the current CRV pools so in principle I don’t see the need of a high incentive (3x can be too much). Perhaps a small incentive in the first week or two, might make better sense.

Regarding the decision to be voted ny the Council or the core team, for me it is the same. The council is already majority core team (some “community appointed” members are now part of the team). I believe that in this particular case, not in the future, the core team can make the decision.

Just to clarify, the existing curve setts will migrate to the new strategy once the gaurded launch has been completed (~1 week). Users wont need to do anything and no fees will be taken.

1 Like

Thanks for the clarification. I will edit my comment accordingly.

There has already been an important change and DIGG emissions. Before, all Setts received DIGG emissions but then this was changed. Emissions for non-DIGG setts ended and they are not getting any DIGG.

Currently all DIGG emissions go to people that hold DIGG (either in the DIGG only sett or as LPs). And I think that those emissions do make a lot of sense (albeit it also makes sense to reduce them as per the proposal).

However I would change the current strategy. For LPs, my understanding of the strategy is that the way that the rewards auto-compound does put some sell pressure into DIGG because part of it needs to be sold for wBTC in order to re-add them to the liquidity pool. Maybe this can be changed to something that incentivizes both LPing and hodling DIGG - for example instead of auto-compounding into the LP, emissions with vesting - a lot of different possibilities here.

1 Like

i appreciate your point of view.

my concern is that at this point in time emitting any DIGG seems to be unfruitful. we’ve been emitting DIGG since the beginning and as of writing this note we are in our second cycle of extended negative rebases and supply down roughly 88% from launch. why do we need to put any more digg into the market? what is the objective of the DIGG based emissions at this point in time?

thank you

lol seems you killing bywbtc already very low rewards failed strategy and you want them lower lol wtf so now incentivize convex setts with a big boost 3x but then reducing by 3x to 1x in the future but then increasing fees lol wtf dont get it the only thing that makes sense is reduce the digg emissions to make them sustainable and keep current emissions until new ones start the rest does not make sense to me lol getting very disappointed on badger lol and on top you want to increase fees wtf lol

1 Like

I don’t like that this BIP mixes questions about flexible governance and operational changes together.

We should decide our governance processes in BIPs focused on governance processes, and use those governance processes to make decisions in other BIPs that are focused on platform change.

It is obvious that the people who pull up this forum post in the first 12 hours will largely support rapid fire BIP’s to the team whereby something is approved on the forum in 24 hours or less and then rolled out at the same time as the snapshot. It’s not very clear what happens if the snapshot fails, and everyone who’s busy and needs more than 24 hours to consider something as complicated as this BIP is excluded from deciding if they should be included.

Otherwise, this is a great BIP.

It is obvious that the people who pull up this forum post in the first 12 hours will largely support rapid fire

You insinuate that the sample we get from the first hours of the BIP posted is not representative of the general distribution of governance preferences, and I believe you’re wrong.

Governance decisions, both when it comes to forum BIPs and snapshots, are done in the first 12-24 hours. If anything, the lagging part of governance participants tends to mirror the majority decision, not go against it.

More than that, the vote about the preferences of token holders snapshot vs the council or the team is signaling - and will be open long after the BIP is done, so the community can signal their preference in full.

The most important part about governance is legitimacy - and vote is a temperature check in this regard.

From the perspective of our current governance structure, there’s no reason to assume that the Council vote should be more legitimate than a short notice token holder vote, or a core team decision for that matter.

I believe a short notice token holder vote is much more legitimate than the Council decision, that’s why I went with it as a go-to solution for the BIP.

The Council was elected to distribute grants without any budgeting restrictions - or the approval of the structure itself. So where do emissions qualify in this regard? An ecosystem grant? That is very far-fetched.

I believe BIPs are a perfect place for these types of sentiment checks, as they present the issue and let the governance show its preference around a specific case - as opposed to being a theoretical governance BIP.

It’s not very clear what happens if the snapshot fails

This can be said about most of our BIPs.

Presuming it’s not a straight sabotage event, when a snapshot fails there should be a counter suggestion or modification to the BIP proposed that can be voted on in the next BIP/Snapshot.

But to answer your question, if the snapshot failed, the default would be to discontinue the emissions on Thursday.

If we had a flexible voting governance structure with sBIPs (small short notice BIPs), we could have an immediate emergency vote that could provide alternative emission structures for the next week or two, like for example halving the rewards - or using different weights to the pools if that signal was clear from the community.

I think this is really the big question to ask the voters. How much time to they need to respond to a goernance request, and how important is it that they have the chance to do so with each one.

If we had a flexible voting governance structure with sBIPs (small short notice BIPs), we could have an immediate emergency vote that could provide alternative emission structures for the next week or two, like for example halving the rewards - or using different weights to the pools if that signal was clear from the community.

I like the idea of sBIPs as veto. Flexible governance is an interesting idea. It’s also been the beginning of most tyrannies and dictatorships formed over the last few hundred years, so one must be careful that flexible governance is still accountable. Look forward to hashing this out more with you and the community in the coming weeks, but for now let’s get these emissions approved!