REP5 Collateral and RULER Mining Emission Proposal

Updates
Snapshot proposals are created.
REP5-a Collateral Delisting Process Proposal
REP5-b Liquidity Mining Emission Proposal

Summary

The goal of this proposal is to ensure that Ruler protocol is running efficiently. Mechanisms, including listing, delisting, and rewards emission, are supporting the protocol as expected.

For Ruler to be an efficient lending solution, it means that

  • Collaterals listed have enough borrowing needs.
  • RULER emissions can support the above borrowing needs without waste.

Looking and analyzing the data since launch, a more formalized structure for collaterals delisting and Liquidity Mining emission is in need. This proposal aims to structure the following process:

  • Collateral types structure
  • Delisting process and criteria
  • Liquidity Mining emission adjustment

Specification

Ruler Collateral Types

There are three major types of collateral on Ruler. Each collateral can change its type through a community proposal at any given time, it will take effect in the next loan cycle.

  • Core
    • Collaterals that have wide-spread recognition in crypto communities, like wBTC and wETH.
    • Collaterals that are important to the protocol like RULER as the governance token of the protocol.
    • Collaterals that are critical strategic partners, like COVER.
  • Norm
    • Collaterals that have some recognition in some crypto communities, like xSUSHI.
    • Collaterals that are from strategic partners, like INV.
  • Innov
    • Collaterals that are from newer projects without wide recognition and unclear borrowing needs.

Ruler Collateral Delisting Process

If a collateral is not borrowed against sufficiently, Ruler will delist the collateral the month after. Collaterals can be listed again in the future when the borrowing needs are justified.

Delist criteria:

  • Total borrow amount is less than $70,000.
  • Borrow/Loan ratio is less than 20%, and rewards reduction is not possible. If rewards reduction is possible, it will be executed before delisting.

Exception criteria:

  • Partner is incentivising the liquidity pool.
  • Collateral liquidity pool has no RULER rewards.
  • Total loaned is expected to be more than 200k.

Liquidity Mining Emission Adjustment

RULER emission for Liquidity Mining consists of two parts. A base rewards rate for each collateral, and a budgeted weekly extra rewards emission. The distribution of the extra weekly emission is up to the community to decide through a weighted snapshot proposal on the 3rd week of each month.

Base Rewards

  • Core will receive a base rewards of 50 - 150 RULER/week based on borrowing needs.
  • Norm will receive a base rewards of 20 - 50 RULER / week based on borrowing needs.
  • Innov will NOT receive any base rewards, requiring partners to provide rewards.

Each base rewards can be adjusted within the type range. For example, wETH (Core) with high borrowing needs will receive a base rewards of 150 RULER/week. xRULER (Core) with lower borrowing needs will receive a base rewards of 75 RULER/week.

Extra Rewards

There will be an extra 1000 - 3000 RULER / week as extra rewards to the Ruler pairs of the month.

The range is based on the total amount of pairs and the borrowing needs from previous months.

For example, based on the data from March and April, 1200 RULER/week is a reasonable extra reward for May. It will be a ~35% reduction in emission for May.

Note: the team may adjust rewards based on the borrowing needs of the collateral.

Monthly Extra Rewards Voting

The distribution of the extra rewards are decided by the community through a proposal. All collaterals of the month can participate in the voting.

Note: Innov collateral type that is voted on to receive less than 10 RULER / week, will be ignored to save operating resources. Those RULER rewards will be split between the other collaterals proportionally.

Discussion Points

  • Collateral type structure and criteria
  • Delisting process and criteria
  • Rewards emission rate adjustment
5 Likes

All criteria looks very reasonable for me. All the parameters as well (<70k borrow delisting, 20% borrow/loan ratio and the RULER rewards amounts)

Looks good to me! Thanks for your work pumpkin!

1 Like

Looks Good !!! Thanks folks :slight_smile:

reasonable proposal. totally agree :jack_o_lantern::jack_o_lantern:

It’d be great to have RULER incentive more efficiently used. So that it’s not just farmed and dumped on the market without adding a lot of value to protocol users.

A manual review of the pools and voting on them sounds like a lot of work though, I am wondering if this can be automated with some equation to calculate ruler emission automatically.

Here are some preliminary thoughts on the automatic calculation. Say that there is a base emission, and r represents borrow/lend ratio, the final emission can be like base emission * r^0.5 , so that when r is high, the emission will be high and when r is low, emission is low. Maybe the market cap of the collateral can be part of that equation too so that things like BTC and ETH gets more emission and less liquid tokens get less emission. Something like emission = base * normalized_mc * r^0.5. where normalized mc is rescaled market cap so it’s a number between 0-1. I think this might be too much of a pain in the butt to program in the contract though. Although It doesn’t have to be part of contract code, it’d be good to just have some general metrics to use as a rule of thumb for Ruler emission.

With that said, my point is that I support the optimization the ruler emissions based on various factors, whether done manually or automatically.

2 Likes

I think the delisting criteria is good. But honestly there is a lot going on here. Before going to snapshot I would suggest breaking this out into two separate REPs. the rewards adjustment, and the delisting criteria.

Is this to say that the Ruler pairs are like the “whatever gets left over in the monthly allocations go to the Ruler LPs?” I think that is reasonable. Will be a minimum of 1k Ruler allocated for LPs per month and maximum of 3k? I’d like to see these details flushed out a bit more. I’m just a little confused, as the “Extra Rewards” section is a bit unclear to me.

1 Like

agreed and please give more notice to repay loans!!

I agree with everything!

What is the teams idea around how the extra emissions are decided. I think this is the main point that needs clarification. 1000-3000 extra per week is more than the total base rewards. The extra rewards needs some more fleshing out.

this looks great.

maybe a dumb question, but where it says “collaterals can be listed again in the future when borrowing needs are justified” - how would this be determined?

Seems good to me🙌, i’ll support this

I like it!! I think extra Rewards for voting is great it helps community to engage and to be actively part of it…

Meaning the partner of community member can start a proposal to add them back if they can show some stats and data that there are borrowing needs.

1 Like

ah got it, thank you for clarifying.

I agree with automation. We are currently manually tracking since we dont have the dev power to automate it. It is once a monthly, so not to bad. It is on our list whenever we have some resources available.

Might be a great contributor mining project.

2 Likes

Hi Feld, the amount is weekly emission. The whole idea is to not waste rewards to purely for farming, but to use the rewards to support the borrowing needs of the collaterals.

1000 - 3000 range is to prepare for potential fluctuation of pairs counts. If there are lots of pairs, and lots of borrowing needs, we want to go close to 3000. If some months are slow, we want to go lower.

The core expiration can be longer. 1 month may too short, 1 quarter better.

I agree with everything!

Ruler should make an “Onsen” for lending, will be a great market fit.