GP12 DeFi Rewards (TDR) Proposal - C3

Governance Rewards Proposals
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Dear Algorand Community,

The C3 team is excited to present a proposal and hear your feedback for the strategic use of our Targeted DeFi Rewards (TDR) allocation. C3 stands at the forefront of showcasing Algorand’s technology as a premier settlement layer within the broader industry. Our focus is on bringing users from various sectors, enhancing the ecosystem’s visibility and utility.

Proposal Overview

We propose to allocate C3’s entire TDR towards Trading Rebates to catalyze growth:

  • Objective: To significantly increase C3’s volume and engagement by rewarding trading activity directly.
  • Distribution: Monthly rebates of 0.10% of trading volume in the form of ALGO rewards which can be claimed by traders during the 1 week claiming period each month. Any rewards that are not claimed are foregone and allocated to the next month’s claim period.
  • Rationale: By dedicating 100% of our TDR to trading rebates, we aim to continue attracting users from outside of Algorand and boosting trading volume. This approach not only enhances liquidity on C3 but also strengthens the retention of traders by providing direct financial benefits to active traders. Moreoever, by increase volume in C3 through these types of incentives it directly translates to significant TPS for the Algorand blockchain. The current impact C3’s volume has been having on Algorand TPS can be tracked here.

This would be a similar program to the live one we have with PYTH rewards which can be seen here.

No prohibited activity per C3’s terms of service would be included in this trading rebates, including wash trading.

Call for Feedback
We highly value the insights and suggestions from all of you. In our quest to refine this proposal, we are open to exploring other innovative ideas too based on your feedback, including but not limited to:

  • Lending Incentives: Allocating TDR to increase Lending yields in C3 to attract external capital by incentivizing lending activities within C3.
  • Incentivized Borrowing: Allocating TDR to reduce borrowing costs, thereby promoting more competitive margin trading on C3.

Please share your thoughts, suggestions, and any alternative ideas that could enhance this proposal.

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This proposal may add transactions, but it does not increase TVL on chain nor does it otherwise have an Algo focus. There needs to be something in these rewards that is focused on helping Algorand besides just Txns go BRRR.

For example, if doing rebates, then rebates should favor Algo in some way (eg higher rebates on Algo trades so as to stimulate Algorand trade volume).

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Thanks for your feedback. We appreciate your perspective on ensuring that our rewards program benefits the Algorand ecosystem directly.

While we understand the importance of your point, we believe that focusing rewards on ALGO asset would limit our ability to attract users from outside the Algorand ecosystem. Our goal is to bring in diverse users and trading activities, which would ultimately enhance the overall visibility and utility of the Algorand network.

By offering trading rebates across various assets, we create an attractive environment for a wider range of traders. This approach not only boosts trading volume but also increases liquidity and engagement coming from different ecosystems.

We are open to discussing how we can strike a balance between attracting new users and directly benefiting ALGO traders.

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It doesn’t sound like you are all that open to discussion. It sounds like you made your mind up.

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Hi @michel. Maybe this wouldn’t be suitable or possible for the upcoming Governance period, but have you considered enabling Governance based LPs to serve as a collateral lending asset for borrowing?

For example gALGO-ALGO LP from Tinyman; mALGO-ALGO LP from Pact. It amplifies the strength of governance tokens, and provides more capital for users within the ecosystem.

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That is a great idea. Our current risk engine can allow for this very easily so we will explore this. Thanks!!

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I apologize for commenting during the governance voting period.
Is this method of reward distribution truly beneficial for Algorand?

For example, in the case of Avalanche users, let’s say they receive ALGO as a reward on C3. (They don’t need an Algorand wallet to receive it, right?)
Avalanche users naturally want to increase their AVAX holdings, so it is common for them to immediately sell the received ALGO and exchange it for AVAX.
If this becomes the norm, ALGO will be constantly sold, meaning a large portion of the Target Defi Reward distributed to C3 could become selling pressure for ALGO.
Moreover, this happens without bringing users on-chain.

What do you think about this idea?

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