Category: Emissions & Treasury
Scope: Revise DIGG 12 week emissions plan; utilize treasury assets to provide additional funding to KPI options and establish a treasury controlled liquidity position
Objective: Create deeper and more concentrated liquidity for DIGG in the near-term by increasing/consolidating emissions and re-funding KPI options rewards; while also establishing a treasury controlled liquidity at a relatively low cost and provide scalability as DIGG goes through a positive rebase streak and creates more BTC.
In an effort to create deeper and more concentrated liquidity the proposal utilizes a multi-faceted approach to ensure both a timely and scalable solution that utilizes treasury assets in a prudent manner.
- Revised DIGG 12 week emissions schedule
- Provide additional DIGG rewards to KPI options
- Establish treasury controlled liquidity for DIGG
(1) Revise DIGG 12 week emissions schedule proposed in BIP 61 beginning in week 5 (August 5th) in the following ways:
- Shift emissions from Uni V2 to Sushi and allow LPs to withdrawal (no fee)
- Allocate additional 83 gDIGG (2.05% total supply) to short-term emissions boost for Sushi LPs beginning wk. 5 through wk. 10; totaling ~8 DIGG
- Revised DIGG 12 week emissions schedule would total 300 gDIGG (7.5% total supply), as there are already 217 gDIGG (5.43% total supply) included from BIP 61
The consolidation of emissions on Sushi coupled with a short-term emissions boost for LPs should cover migration costs, while also incentivizing new liquidity positions on Sushi. The short-term emissions boost would be weighted heavily at the beginning and slowly scale back by week 10. The revised gDIGG total allocated to emissions would by about 7.5% of total gDIGG supply.
Although less efficient, relatively speaking, consolidated emissions + boost should provide a sizable increase in APY and incentivise migration; while bringing in new buyers.
Additionally, this would lead to increased revenue as Badger DAO receives a performance fee from Sushi, provide an opportunity to focus on capital efficient liquidity strategies with Uni V3 and Sushi Trident, and additional time to educate market on more efficient strategies to emit DIGG rewards (i.e. KPI options)
(2) Provide additional DIGG rewards to KPI options. Currently 240 gDIGG (6% total supply) have been allocated to the KPI options rewards pool per BIP 53 by Jonto, but in relation to DIGG this pool has decreased ~71% due to negative rebases.
This proposal would allocate an additional 160 gDIGG (~4% total supply) to rewards to ensure funding of rebase mining in near future. In relation to DIGG, this would increase the rewards pool by ~67% (~16 DIGG as of today) and bring total rewards to 400 gDIGG (~10% total supply)
- Allocate additional 160 g DIGG (4% total supply) to KPI options rewards pool
- Rewards would be included in subsequent rebase mining event set to begin August 1st
- Options allocated to rewards will not increase and remain 177,739; effectively increasing the value of options at the start of the subsequent event.
Utilizing KPI options to unlock DIGG rewards is a more efficient form of emissions as they align incentives with behaviors; only emitting rewards if >5 positive rebases occur. Essentially DIGG rewards are earmarked for later use and not substantially different from holding in treasury. Since KPI options are not widely understood, the intent is to continue boosting APY while continuing to educate the market on how KPI options can be utilized to emit rewards.
(3) Establish treasury controlled liquidity as a means to further increase liquidity in a cost-effective way due to the small amount of BTC required today. This liquidity can scale as DIGG goes through positive expansion and there will be more BTC available from that LP, and BTC is generally what DIGG lacks. Keeping that in LP would already have the peg stabilizing effect, and there would be further options to utilize it in the future, while controlling its own liquidity.
The below options to establish treasury controlled liquidity are based on total DIGG supply and would require commensurate BTC. After deducting for emissions/options increase, the treasury accounts for ~22% of total DIGG supply.
- 5% = 19.6 DIGG + 16.78 BTC; 1.2 $M worth of liquidity
- 10% = 39.2 DIGG + 32.6 BTC; 2.5 $M worth of liquidity
- 15% = 58.8 DIGG + 50.3 BTC; 3.7 $M worth of liquidity
- 20% = 78.4 DIGG + 67.1 BTC; 4.9 $M worth of liquidity
The above numbers provided were for DIGG at 87% BTC. In the event that DIGG price increases between now and execution, the selected option to establish TCL would continue up to 1.15 DIGG/WBTC. If DIGG exceeds 1.15 DIGG/WBTC the decision to establish TCL would be at the discretion of the Council.