GP11 DeFi Rewards Calculations

Hi Algorand,

Here are the ALGO allocations for governance period 11. The AF team supporting this release utilized two specific snapshot dates for the information shared in the spreadsheet.

Direct link:
https://docs.google.com/spreadsheets/d/1r0j_R1jwm1FQ3KwsubEMEIpASpiD-9Bg7Tukc_w_tGk/edit?usp=sharing

You’ll find four tabs in the spreadsheet:

TVL
Fees: Total Generated Fees (7/11/23 - 7/02/24)
Active Users: Active Users (7/11/23 - 7/02/24)
3D_Metric
The two TVL snapshot block times are:

TVL-1 (Block: 34866735)
TVL-2 (Block: 35916735)
These snapshots were taken in advance without the DeFi applications knowing the fixed blocks.

For the breakdown of the calculation, please refer to the “3D_Metric” tab, which consists of:

TVL: 60% weightage
Fees: 20% weightage
Active users: 20% weightage

In previous iterations of Targeted DeFi Rewards (TDR), the metric used was solely TVL with 100% weightage. However, we now believe that fees and active users are equally important and have included them in our calculations.

One major challenge we faced was the diverse business models of each application. Some applications, such as bridges, operate differently from a DEX. Hence, the DeFi committee of applications [Folks Finance, Tinyman, Humble, Vestige, Algomint, Lofty, Pact, Messina, Algorai, Meld Gold, xBacked] plays a crucial role in this process.

Ownership of the calculations lies with the participating projects, and mutual scrutiny is applied. All participating projects were urged to cross-check these numbers.

We welcome your feedback to gradually improve the calculations. Your comments are greatly appreciated. While we may not be able to address every feedback immediately, each suggestion will be discussed in an upcoming DeFi committee meeting and implemented if it is a beneficial improvement to the calculation methodology.

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Thank you! LFG! :raised_hands::raised_hands::raised_hands::raised_hands::raised_hands::raised_hands::raised_hands::raised_hands::raised_hands::raised_hands:

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Welcome to the forum :slight_smile:
Interesting to see the breakdown. Could we put it to vote to lower the cap. Perhaps to 1.5m Algo. I think it could help drive growth on some of the smaller platforms. Also, do we include assets in NFD and vestige vaults in TVL calculations too?

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Thanks Rich, Hashing!! I’m going to try my best.

Noted on the lower cap (got it down for discussion). Regarding Vestige, will leave it for the team to comment. For NFD, as its more towards an NFT project its covered by the NFT program.

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Thank you for the reply, I really appreciate the insight.

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I extended the final table (see below) with 4*Fees/TVL (so platform average fee APR) and 4*rewards/TVL (so platform average reward APR). Pretty much all protocols are receiving rewards that trump the fees by a LOT. Do we really need to give projects 10 times what they are earning? Is this an effective use of the funds we have at disposal? We need to question the viability and results of the TDR program, we are dumping a LOT of algo into it, but are we really seeing a good return on investment here?

This also creates a huge barrier of entry for new protocols. How will new platforms be able to attract TVL when fee rewards are a tenth of the TDR boost? Why would a new user ever feel like it’s worth using anything new? Because as it stands right now you only get the TDR based on what you had before, but building that up when you are already lagging behind by a factor upwards of 10 makes it close to impossible to break through on here. These incentives are actively hindering new development from new teams as the only ones who get insane amounts of rewards are the OG teams with established TVL and thus established rewards amounts, which they can then use to market their new stuff.

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We didn’t apply for rewards for this period and vaults didn’t report any TVL. However, if a user deposits an LP token in a vault this will count towards that DEXs TVL. Afaik it’d be the same for assets in NFDs, vanilla assets in an NFD account will not count towards TVL, and an LP token will just count towards its DEX

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A lower cap would be great! This would help smaller projects getting a bigger part of the TDR to try to gain new users and level the playing field more. Bigger projects should start finding ways themselves to attract new users, they have been a bit lazy and rely too much on the TDR imo.

That’s so bad… They get a lot of ALGOs and don’t seem to have anything to show for them.

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I want bigger inclusion of projects and lower cap.

I would like to give interest on our ASA.Gold project as well to general public and we will attract more people to algorand. Our current TVL of gold token is $16k

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I’m not sure that’s the correct way to frame it - we’re giving rewards to the users of the platforms… not the platforms themselves. These fees are actually the fees earned by LP providers right?

TDR has to an extent replaced governance rewards (as TDR increased, gov rewards decreased). Is the ROI on TDR better than governance rewards is maybe a better comparison. I think it is.

It’s a nice marketing budget for DeFi, but its a super competitive market - almost every single protocol on other chains has a similar (often much greater) incentive to try and reach a critical mass that ANY of this becomes sustainable.

ROI can improved im sure tho… we’re talking growth of Algorand users as a whole, network effect, is there enough exposure on twitter/crypto feeds that these APR returns even exist? Community plays a big role here.

Using platforms on other chains the UX of Algorand DeFi is often on another level, a UX that i’ve not seen pushed. For example, I’m providing liquidity on AVAX and SUI… on both rewards are paid out in 2 week epochs. On Pact rewards are refreshed every second! I can auto compound daily with Compx. And on Algo im earning in the chains native token, not some protocols ponzi token. I’d like to see some marketing that better represents the difference of UX.

I do agree that new teams would struggle to make impact without a reward allocation, but are the new teams in the room with us now? We don’t have the luxury to worry about new teams and innovation when the current teams themselves are running pretty stripped bare - i’m sure most would love to develop at a faster rate than current market conditions allow - the talent is there, the market isn’t

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Ah of course, LP tokens are abstracted tokens for the tvl in the dex slaps forehead

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Thanks fam for the feedback and comments. Noted them down and we’ll be actively discussing the points mentioned for the current and next TDR.

  • Increased inclusion for more projects (DEX LP incentives and general inclusion)
  • Fee to TVL incentives
  • Breakdown of DEX TVL LPs

What does Cometa have to do to get recognized in this group? They have done more for the community than every DeFi platform and remained more active than all DeFi platforms except Folks Finance.

Others that got included in this had to get grants and TDR funding just to be relevant and still rely on the helping hand of TDR. Cometa has received neither and constantly is left out of all DeFi conversations but does more than all except Follks and Tiny when it comes to DeFi. They are the only ones not ever included in anything DeFi related on Algorand.

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Thanks Rich, it’s a good point. I’ve extended an invite to Nikita @ Cometa on 26 & 29 June 2023. And, recently, 14 February 2024. They have done a lot and are always welcomed to join the DeFi committee.

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Great to see the breakdown and information on how DEXs are rated for the amount of allocation they receive to distribute. I’d also like this level of transparency over allocation of rewards, provided by more of the DEXs.

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