Future emission schedule - the technical side

The current NDX reward schedule will end on March 8th. It has been incredibly successful, allowing us to achieve a heady $70m TVL in just over a month. However the current emission rate isn’t sustainable in the long term. With multiple new indices just over the horizon, an alternative approach must be decided on and implemented to ensure rewards don’t simply end, but also don’t bankrupt the DAO, and keep long term success at the forefront of our planning.

Given the rapidly changing defi landscape it is vital that we remain flexible and able to react to any changes that occur, thus any proposed extension of liquidity mining rewards should allow for reactive tinkering as and when this may be required, rather than naively and immutably locking in set reward amounts over long periods.

There are a few ways to achieve this, though after some reflection we believe that implementing a masterchef style distributor contract with regular pool allocation rebalances is a very good option.

The masterchef distributor allows for far more granular and pro-actively governed approaches than those normally deployed by projects with multiple reward pools.

For instance, synthesising a balancer style reward system with the masterchef - proportional rewards per dollar value staked - would reward liquidity provision in an equal and fair way, without having to deal with off-chain snapshotting or cumbersome and expensive token distribution.

Governance would determine a long term emission schedule equating to a set amount of NDX to be paid out per day, and the pool reward allocations would then be calculated and set based on index TVL. This approach would also allow for more adventurous and complex emission schedules to be implemented, vesting rewards for instance, and would make the addition of new index’s into the reward pool trivial. There is also no reason why the NDX per day needs to be a flat amount, and it could be made to scale with any number of indicators or decaying curves. Upgrades people, upgrades.

This method is also advantageous since it would lead to minimal disruption in the markets of underlying tokens - there wouldn’t be a rush to buy up large quantities of relatively illiquid tokens on AMM’s and dex’s to take advantage of very high short term NDX rewards on a specific pool, artificially driving the price up and having potentially reflexive implications (driving the price up increases market cap, increasing the % allocations within an index, forcing further buy side pressure to hunt better yield). This isn’t an overwhelming issue in and of itself for NDX, but could lead to a situation where the potential inclusion of a token in an index, particularly smaller cap projects, would lead to pre-planned pump and dump actions and other negative second order effects, something we likely want to avoid being associated with.

There still needs to be a wider and longer discussion around exactly what the tokenomics and distribution schedule will look like, the hard numbers, but the first move here has to be how we will handle distribution from a technical perspective.

Obviously there are many other ways to achieve the above, though I believe this approach has the required flexibility without compromising on security, cost or ease of use.

Big thank you to @litocoen for helping with this.


I like that we are taking the second order effects seriously. I’m for all serious discussions of sustainable distribution systems and think that vesting rewards make the most sense for NDX farming, dumping the tokens immediately is bad and encourages the wrong type of liquidity provider to participate just for the rewards then move on.


Adding this comment from Discord to keep the conversation in one place:

suggestion for handling NDX emissions in the future: implement a version of Curve’s gauge system where users lock up NDX to vote for the emission weights assigned to each staked index


I am willing to vote for upgrades to distribution curves. thanks to blurr and litocoen for starting this discussion.

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Great idea. This is the way.

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Agree there should be continued incentivization of the indices.

I think this should only happen after or simultaneously with a vesting/staking system though. Otherwise farmed NDX is dumped on the NDX holders and that makes it less desirable to hold NDX, less people voting, etc.

There must be balance between inflation through incentives and deflation through vesting/staking.
I think Curve and Bancor are two successful examples of this.


I like the balance idea of vesting / staking. Perhaps in addition to vesting, there could be a mechanism that allow people to immediately withdraw but give up a portion of their rewards (same concept of vesting, but would make vesting optional and return ndx to the treasury for those not willing to wait?).

I’m all for it! Curve’s tokenomics are probably the most sophisticated in the space

Gauges are genius because they create incentives for large whales or other protocols to buy a lot of CRV (NDX in our case) and lock it to get their pool (in our case index pool) rewarded

Am not a fan for the whole lock up NDX to vote for params. People should be able to freely sell their NDX should they not agree with a proposal that will execute or are unhappy. Otherwise yes using TVL to distribute NDX to allow for LP incentives would be great, though we shouldnt do this for just holding the indices or atleast should be rewarded lower, simply because we want these indices to be able to be purchased by new investors without needing to take on the high gas fees with minting. This would then possibly be able to be partnered with small allocations to bootstrap liquidity for new pools as well. Otherwise the big pools just hold the highest rewards as people will see large allocations and not understand that by locking into the smaller pool they will be rewarded properly later.

@pr0 I totally agree that rewards for just staking the index tokens should be (probably significantly) lower than staking rewards for the eth-(index) staking.

the dump is unsustainable

Can a multiplier be evaluated for effective long term staking? Some type of S-curve to account for users holding for up to say 30 days The S-curve as a Forecasting Tool then it rapidly appreciates to some max value.

I think switching between LPs/pools should be disincentivized.