Draft - REP-02 - Operation Measured Increase

Hello all, this is a a repost of the post I outlined in the governance channel in discord. I want to post it here to gather more formal feedback.

(**EDITED THE NUMBERS TO REFLECT THE DISCORD POLL: Discord )

As many of you have seen, the Ruler token price continues to struggle. While governance tokens going to the moon isn’t the goal of a project, it should be noted that currently, those that hold the token put themselves at tremendous risk to provide liquidity. Not only that, those that believe in the protocol are holding the tokens, and those that are just looking for yield on their stables/btc/eth see the governance token as a side benefit they can then dump.

While I agree with rewarding those that use the core function of your product well, even they will be disincentivized to earn a token that doesn’t reward holders first. I propose an increase to the LP rewards to 3500/wk (up 100%). I consider this increase modest, but a step in the right direction when it comes to rewarding those that have put their neck out to be an LP on this token. With only 20% of the rewards currently going to token holders, this puts severe continued downward pressure on the token price. Currently, I feel the incentives don’t promote holding the token.

This is why I also suggest that Ruler-Staking rewards be increased. As it seems the current proposal to create staking rewards at 40/wk proposed by @MichelVaillant will pass, I believe this is not enough, as do many others in the community, and this breakdown simply brings it closer in line with what other protocols are doing.

Here is what the new rewards breakdown would look like after the change (rough numbers, though I’m not sure where the original 40 were going to be taken from):

WETH-RULER 3500/wk (+1833)
RULER-Staking 600/wk (+560)
DAI - RC_WBTC_25000_DAI_xx 900/wk (-1119)
DAI - RC_WETH_750_DAI_xx 900/wk (-1119)
DAI - RC_COVER_250_DAI_xx 201.92 (+0)

For those of you that like percentages, that would give us a rough breakdown of:

LP 60%
Staking 10%
WBTC 12.5%
WETH 12.5%
COVER 5%

Though I was initially a fan of a more modest approach, I believe this rewards can be a moving target and we can realign incentives if needed. (I personally was a fan of the 60/40 split instead of the more aggressive 70/30 split, but I was outvoted!) I believe this will create a positive feedback loop and incentivize more people to want to earn RULER via lending as well, despite the lower rates as the token is less of a biproduct and more of an reward/investment. Let’s discuss!

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Wow, I am glad to see community members are active and thinking about the long and short term growth of Ruler.

One thing that is in our plans, but we have not shared yet. That is the emission rate (rewards/week) will decrease for all current pairs. 4500 RULER (/month) will be used for wBTC (same for wETH) for next expiry. 450 RULER (/month) will be used for COVER. Other new collateral types will have similar rewards.

We will have xRULER deployed soon as the proposal is passed. We will also add xRULER as collateral as well as the price gets more stabilized.

The main differences now are rewards for WETH-RULER, and xRULER.
xRULER is a pretty risk free for those who plan to hold long term. I am worried that too much rewards for xRULER can lead to a sell pressure after the lock up period (6 months).
I think a good way to think is in terms of fees. We generated about 100k fees this month. 6 months later, RULER rewards for xRULER will end, instead, % of the fees (rest goes to run the protocol) will go to xRULER. That % in USD worth should be pretty similar to the rewards for the lock up period.

I would love to hear everyone’s opinion.

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Ok, so you are cutting the rewards by 50%ish then next month. Are we to assume that a ton more assets are coming for next expiry, or are the emissions just going to be less for lenders then?

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I fully support it!Create a positive incentive that benefits all partners and community members.

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