[Proposal] Determine Whether To Transfer Additional Staking Rewards To Masterchef Liquidity Mining Contract

Hi all,

Please read the below proposal text regarding the topping-up of reward NDX for the dynamic rewards program for liquidity provision.

Prior to this vote going on-chain, it is worth first determining whether or not the DAO wishes to continue with the program as is, or simply route enough NDX to meet current obligations and then terminate the program prematurely (with mind to producing an alternative scheme for liquidity incentivisation in the future).

I’ve set up a one-week Snapshot vote to this end, which should be long enough for folk to ask questions if they’re not clear on anything and cast their votes.

Link to the Snapshot is here, and contains a little bit more detail: Snapshot

tl;dr read the Snapshot text and the below!


Transfer Additional Staking Rewards To Masterchef Liquidity Mining Contract

Background

Back in May 2021, the Indexed Finance DAO launched its dynamic liquidity mining program, handing out NDX governance tokens as a reward for parties that provide liquidity for indices maintained by the DAO.

This program is set to run for approximately two years and is set to emit 1,500,000 NDX over the course of its lifetime, with emissions decreasing on a linear curve as time goes on.

Initial Setup

When the program was started, the Sigma Committee transferred 527,500 NDX tokens to the Masterchef contract, per the result of this Snapshot vote. This initial deposit represented emissions for the first million blocks (approximately 5.5 months), with the intent being that this served as a ‘checkpoint’ for the DAO to reflect on the program and determine whether it should continue.

That checkpoint has arrived: while the tokens within the Masterchef were all allocated at some point in November 2021, and all subsequent emissions have been a form of ‘debt’. LPs have now claimed sufficient NDX from the Masterchef as to require more tokens to be moved from the Treasury in order to honour existing and future claims.

Proposal

This proposal - if executed - moves 600,000 NDX from the DAO Treasury to the Masterchef contract, in order to meet current obligations and extend the emissions runway until early July (calculations determined from this spreadsheet).

Thereafter, a second checkpoint vote will have to take place to determine whether the DAO should transfer the remaining 350,000 NDX (approximately) to cover the remainder of the program’s lifetime.

1 Like

For simplicities sake, I think we should just continue the program as-is until Indexed has caught up on some of the improvements to the protocol.
We can revisit this topic at the next checkpoint.

Did anything ever happen with the Protocol Owned Lquidity discussions with Olympus?

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I am of the opinion that the current LP rewards are too generous and was hopeful that POL or other approaches could be discovered to replace the current program. Also, with the removal of the hacked indices I think there simply are too many reward tokens for too few indices.

I do appreciate Kuza’s comment about the simplicity of continuing the Program, but it feels like we would be spending a lot of NDX for limited benefit at a time when the NDX value is at historic lows.

I’m going to reflect a bit more and check back in before voting. If the liquidity dried up, how bad would it be to promote mint/burn strategies as an alternative to DEX liquidity?

I definitely agree with you that with the loss of 3 of the indices the rewards are very generous, but when I think about it these things come to mind.

  1. Changing the rewards flow now might make people think Indexed doesn’t keep its commitments (even though it was always a flexible rewards structure). Most people likely won’t know that.
  2. Now more than ever we need people to see our indexes as attractive in order to generate revenue and maintain liquidity.
  3. It would likely mean more work for Dillon and Laurence to restructure it rather than just refill it.
  4. I’m hoping that we’ll be able to incentivize the Poly index which should even out the rewards a bit more, they’ll still be high though.

Is this why NDX-ETH is at 0%?

Yes, I’ve reached the same place as you. I’m now in full agreement to continue the program and will be voting as such. Let’s get more index products launched to share in the rewards.

No, I think the reason for that is that the Sushiwsap lP incentive program ended, that was separately funded by Sushi and is different from the NDX rewards program.

OK then continuing the program will NOT fund rewards for NDX-ETH?

That is correct, only the index products that have NDX rewards would be funded.