I propose a revision to the developer mining program that pays a ratio of UMA to TVM (Total Value Minted) per week for dapp mining, and launches an uncorrelated global liquidity mining program with a target APY that we can change occasionally.
I propose that instead of a fixed # of UMA per week, the program awards a ratio of UMA/TVM (Total Value Minted.) This should alleviate some of the “zero-sum” experience that some developers have reported. If another dapp’s TVM goes up, your payout does not change.
These dapp miners will earn this when they tag their mint transactions. They can mint from any token at all and earn these rewards.
The dapp miners are welcome to pass along some of their own rewards to users who mint or users who liquidity mine, which may be more important for certain higher-risk assets.
If we do this, contracts become public goods and developers will not launch multiple redundant contracts. Or at least they’d have very little incentive to do so!
How the ratio works
We’ll set a ratio of $UMA/TVM in millions. For example, imagine we offer 1200 $UMA weekly per $1M minted. A dapp with $1M in minted value for 1 week will receive 1200 UMA.
xx% APY Global LM Program
This global program aims to give a somewhat consistent reward from liquidity mining across all contracts. We could imagine it working like this:
We start with an APY we intend to target, e.g., 35% apy for all pool liquidity.
E.g. - If we had $100M total pooled liquidity, we’ll give away $670,000k of UMA.
We’ll just adjust that APY based on a number of factors. We can do it monthly, and based on some criteria – Required liquidity and sensitivity to dumping.
This will make it so much easier to talk about this program and promote it on farming websites.
Known issue - Liquidity would pool to stablecoin + low risk products. But this isn’t a new issue, it exists in the current model. We’ll have to get more creative with short-term or additive programs, and dapp miners can layer their own incentives on top from their bonuses if they like.
Ratio and APR Adjustments
This is a detail we can sort over time, but I imagine on a monthly basis we’ll announce that we’re changing or keeping the APR and Ratio amounts for the coming month.
Based on our experience at Perlin earlier, this is a much efficient use of token. The freed up resources can be directed to special events /actions that has higher impact (e.g. Hackathon, bounty).
Should result in healthier community and more sustainable tokenomics
Liquidity would pool to stablecoin + low risk products. But this isn’t a new issue, it exists in the current model.
I think one of the main criticisms with the “low risk products” is that they are not actually used by end users. They are relatively capital-efficient to mint (using a low collateralRequirement), and do not expose the sponsors to any impermanent loss risk as an LP. However, end users don’t actually trade the product.
Is there not some way we can incorporate secondary market volume into the rewards? This would make (1) Total Value Minted and (2) Trading Volume two factors that determine a dapp miner’s rewards.
I think the rewards system should cover all the diff use cases and not just LPing, otherwise sponsors have little reason to do more than minting and LPing:
minting and trading away the synth (shorting)
adding liquidity without being a sponsor
holding the synth without being a sponsor?
For non YD products, someone that bought the synth and is holding to it betting on it’s price is as much of a “UMan” as an sponsor, the system needs both.
Couldn’t you game this easily? E.g., holding the synth without being a sponsor, just send your minted tokens to a different address you control. Same with shorting really.
Adding liquidity without being a sponsor is currently how the yield dollar LM program works – Others like uSTONKS require mint+pool to be an LM.
I don’t think LM is a perfect model but ideally we build products that are actually useful so trading/shorting them is incentivized by product design – And liquidity is in service of that.
These changes look great. Appreciate all the work you have put on this Clayton. Do you have any idea of the timing or next steps for the revised program?
