Proposal to Lower Stable Farm Emissions

Summary

The goal of this proposal is to ensure the stability and positive sentiment around the Ruler protocol.

Ruler’s success is very much community driven, and in order for the community to remain strong we must decrease the stable farms’ APYs.

Current Problem:

  • TVL indicates a protocol’s overall health and success. Ruler’s TVL is growing, which is obviously a good sign, but not when that same TVL is the cause for negative price action. Roughly 50% of the 92 million dollars worth of value is locked in the 3CRV-* pools with extremely high APYs, leading to, what the kids call, a “farm n dump”.

Solution

The solution is simple, and brings a net-positive gain for the Ruler community and token holders: Lower the stable farm emissions

This will lead to a re-balancing of TVL where ideally most would be locked in the Sushiswap pool and xRULER farm. Rather than being attracted to lucrative stable farms, traders will now be more inclined to purchase RULER, leading to an increase in buy pressure and more decentralized governance due to an increase in unique holders.

WIP

4 Likes

As I mentioned in my reply to the other post regarding onboarding new assets, we are quickly becoming the best stable farm in town, which is attracting industrial farmers who want to park their stables and dump rewards for easy money. This isn’t healthy for the long term growth of the community. Sure, the protocol gets more TVL and volume, but until rev share is implemented for xruler, it hurts ruler holders.

I would like to suggest that we also increase rewards for xRuler staking. This would incentivize people to stake their rewards from the stable farms and pool2 instead of dumping them.

The WETH and WBTC pools show 30-50% APY. This is reasonable.

I think the issue is that we simply have too many pools. When you have like 12 pools all farming 80-150% APY, the dump adds up.

We’re on the right track, but I think this needs to be addressed before the community gets tired of getting dumped on relentlessly as we’re used as a pitstop by farmers.

3 Likes

I proposed using this mechanism to reduce or even eliminate emission:

We can charge a % deposit fee to the collaterals, and the % can be higher and or lower depending on the token. It can be 0.01%-1% range, with the higher fee for more risky coins. And use that fee to buy back RULER from the market, and use that buyback RULER to incentivize the pool.

This way we could end up with greatly reduced RULER emission if it goes well.
This means also that we can add 100+ pools to ruler without needing to worry about emission. It will really expand ruler use case.

It’s essentially borrower paying a small fee to attract lending liquidity. I think is fair. Just lending interest alone might not be enough, and lending interest fluctuates a lot. having a RULER emission coming out of borrower’s pocket will provide a stable APY to the lenders.

Pumpkin said this requires major updates on the contract. But I think it will be worth it.

1 Like

I like this idea a lot. From what I understand about institutions getting into the space, they are looking for the best places to farm stablecoins. Alchemix used to be the best game in town, now we are. If we shun those types of farmers we should see the Ruler token take a breather.

I’m in. I say we chop them all by a hearty 50% and the effect.

2 Likes

Before there is a ready order-book, farming is extremely important to attract liquidity to the rcToken pools so people can borrow.

The balance of how much to incentivize is a harder problem to solve. We want the farming emission to be JUST attractive enough to allow the protocol to function as it should be.

That is why we have REP5. We will continue to adjust rewards for each pool based on utilization ratio as we go.
At the same time, we are looking into potential lock solution to heavily reward long term investors to hold and lock.

Ideas and suggestions are welcomed to share.

1 Like

I like the idea of locking the Ruler emission. It will massively reduce the selling pressure and align farmer’s financial incentive with Ruler. turn farms into insiders and they will contribute to the community.

the downside is that it might turn away farmers all together and there won’t be enough liquidity. I guess the amount locked and how long locked is key.

I approve. I am rulah.