GP12 DeFi Rewards (TDR) Proposal - Folks Finance

Hello everyone, please find below the Folks Finance TDR allocation for GOV12 period.
Feel free to share your feedback.
Note: * Allocation may vary during the period. Some pools will have a higher allocation because they will be co-incentivised by our partners

Deposit Boost 11.41% 180,000.00
USDC 8.87% 140,000.00
USDt 1.90% 30,000.00
EURS 0.63% 10,000.00
Liquidity Pools 9.50% 150,000.00
Pact gALGO/ALGO (Stableswap) 9.50% 150,000.00
Lending Pools 65.15% 1,028,160.00
Pact ALGO/USDC 13.62% 215,000.00
Pact USDC/USDt 9.50% 150,000.00
Pact EURS/USDC 4.44% 70,000.00
Pact USDC/gALGO 1.90% 30,000.00
Pact wETH/ALGO 1.58% 25,000.00
Pact wBTC/ALGO 1.58% 25,000.00
Pact EURS/ALGO 0.95% 15,000.00
Pact wAVAX/ALGO 0.63% 10,000.00
Pact wSOL/ALGO 0.63% 10,000.00
Pact wLINK/ALGO 0.63% 10,000.00
Pact wMPL/ALGO 0.32% 5,000.00
Pact GOLD$/USDC 0.32% 5,000.00
Pact SILVER$/USDC 0.32% 5,000.00
Tinyman ALGO/USDC 13.63% 215,100.00
Tinyman USDC/USDt 9.68% 152,730.00
Tinyman gALGO/USDC 1.59% 25,020.00
Tinyman wBTC/ALGO 1.59% 25,020.00
Tinyman wETH/ALGO 1.59% 25,020.00
Tinyman wBTC/USDC 0.95% 15,030.00
Tinyman wETH/USDC 0.95% 15,030.00
Tinyman wAVAX/USDC 0.64% 10,080.00
Tinyman wSOL/USDC 0.64% 10,080.00
Tinyman wLINK/USDC 0.64% 10,080.00
Marketing 6.34% 100,000.00
Zealy 3.17% 50,000.00
Bridging Campaign** 3.17% 50,000.00
Consensus 4.44% 70,000.00

**Joint initiative with Tinyman to attract external liquidity in the form of wAssets, the program will be also gamified with the issuance of NFTs. Criteria and rules will be published in the future as they are still TBD

4 Likes

Pretty reasonable breakdown to me. One suggestion is to reduce the allocations for wAsset/Algo pools and increase the allocations for wAsset/USDC pools for wBTC and wETH. I think this would make it more attractive for external liquidity for both BTC/ETH as well as USDC.

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Hi, thanks for your feedback. Two things to mention: the wBTC/ETH with Algo pools generated much more volume compared to the Usdc pools (x5-x9) and in the “bridging program” the wAssets/Usdc pools will be involved

Hi,

Otherwise looks good but I think Pact gALGO/ALGO (Stableswap) is bit too much like always… maybe take 50k off from that and add Tinyman fALGO/fUSDT & fEURS/fUSDC lending pools.

Best regards,
ROAM

1 Like

I stand on my belief that extra incentives should not be provided for LPs involving native tokens and their liquid staking/governance equivalents (gALGO/ALGO). These are essentially risk free pools whose incentive should come from the fees gained on them because of the volatility associated with other pairings that would naturally result in activity in the pool via arbitrage. I do not see a reason to add extra incentives to these pools.

Given that liquid staking protocols have an incentive to keep doing however (as this low hanging yield helps steal away users from other liquid staking protocols) I believe the AF needs to set hard caps on such rewards. Until then, or until these protocols disarm unilaterally, I will keep voting “No” on any TDR that involves these incentives.

3 Likes

Considering the planned sunset of gALGO, I suggest reallocating TDR from gALGO towards wAsset lending pools.

The primary objective of TDR is to foster growth within the Algorand DeFi ecosystem. Incentivizing gALGO liquidity serves little purpose as it is temporary and does not contribute to long-term growth.

PACT

Lending Pool ALGO TDR
ALGO/WBTC 75000
ALGO/WETH 75000

|ALGO/WSOL | 25000 |
|ALGO/WAVAX | 25000 |

|ALGO/WLINK | 25000 |

TinyMan

Lending Pool ALGO TDR
ALGO/WBTC 75000
ALGO/WETH 75000

Thank you all for the feedback

@GhostOfMcAfee I agree that incentivising the type of pools you mentioned isn’t really necessary, but the way gAlgo works is different as it doesn’t have “instant” redeemability, so it’s important that there is liquidity in the stableswap pool to maintain the gAlgo stability and ensure a smooth liquidation process, so these rewards are only there to ensure that liquidity flows into it (always taking into account the efficiency of the stableswap design and the gov rewards). Since G10, the rewards in gAlgo/Algo pools have been reduced by a total of 60%, considering also the reduction I will mention below.

@oysterpack Yes, gAlgo will be phased out once the consensus model is operational, but it is still relevant as it will continue to run for at least one quarter and possibly another. We will release a plan to have a smooth transition from gAlgo to xAlgo
As for the wAsset allocation, we know the importance of it and we think the current allocation is good enough to make it attractive and you should also consider that 125k (in total) has been allocated to the “bridging program” where the wAsset pools will be involved. We’ve allocated almost 200k to wAssets + 50k for the Bridging Campaign + there are the Wormhole, Pact and Tinyman allocations.

@ROAM We’ve reduced the allocation in the gALGO/ALGO pool and the rewards will go to: 20k Usdc/Eurs (Pact), 15k Algo-Usdc (Pact), 15k Algo-Usdc (Tinyman)

3 Likes

Could you provide further details about the “bridging program”?

Criteria and details are still TBD but the general idea is as follows: Users bring the liquidity of a whitelisted asset via Portal and deposit it into a lending pool on Tinyman, at some point, if they meet the requirements, they will be able to claim a special NFT that will give them access to a “hidden” incentivised pool.

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It seems like stability is helped in large part by swap routing and arbitrage bots. You can swap Algo for gAlgo without a massive pool of those pairs. People use that pair though because it is low risk for IL. It’s not really adding much in terms of usefulness.

However, given your explanation as to why this is done, I hope that when we move to a consensus and there is a more regularly redeemable liquid staking token that (to the extent TDR is still a thing) no rewards go to those pools.

3 Likes

Yes, because of the way stableswap works, which allows users to minimise the impact in the swap and it doesn’t need a huge amount of liquidity. We know it is a low-risk strategy, which is why we have agreed with the community to reduce the rewards significantly over time. It’s not “useless” because it allows you to set “safer” parameters, which has the consequence of helping both lenders and liquidity on Dex because you can borrow against it. Regarding xALGO yes, you’ll be able to unstake your xALGO and get the underlying asset immediately

2 Likes

To be clear. I don’t think the native/wrapped pool is useless in and of itself. What I find useless is the allocation of significant extra rewards (above and beyond the DeFi governance incentives + swap APRs).

My aggressive stance towards this stems from the fact that the two liquid staking protocols have an incentive to battle each other over this particular pool setup to capture users seeking highest risk adjusted yield even though these bonus rewards add only marginal utility at best. If AF isn’t going to step in to impose hard limits on this across all protocols, then someone has to be the squeaky wheel.

3 Likes

I understand your point, but it’s not that we want to incentivise this pool to capture the market, otherwise we would have incentivised the gAlgo/Algo lending pool, which would also benefit the lending market, but it’s for the reason I explained above. We’ll monitor it and we’ll reduce the rewards again in Q4 in case.
This TDR plan is 100% pro ecosystem growth, with a good mix of pools that generate volume and pools that attract liquidity + Initiatives that have been proven to be successful
Thanks again for your feedback, I appreciate it

3 Likes