TDR is a collective tax and a redistribution of wealth. There is no good reason that the chain as a whole should be paying to incentivize liquidity of coins outside of key trading pairs. As much as I like Coop (the person and the coin) it’s ridiculous that the chain is collectively paying people provide liquidity between it and Gold/Silver.
The Algorai allocation also seems completely out of proportion. The platform sees very little usage and I just don’t see how this is meeting the needs of the ecosystem.
As a general matter (this applies to all platforms) TDR has been and continues to be abused and it should be ended. And I’m very disappointed that we have now regressed from a system of voting on these measures to a system where platforms are once again able to pick and choose allocations without even the legitimacy of a vote.
We are now going on two years of a program that was supposed to be both temporary and limited. Yet, it appears to be neither. We keep shoveling money out the door without any real game plan, reevaluation, or reflection. The continuation of this program, particularly in this fashion has me to the point that I am essentially abandoning hope that discussion in these forums can effect positive change or that rank and file voices really matter all that much.
Hey @GhostOfMcAfee
I appreciate the thoughts; some context probably helps as well. The renewal of TDR was only decided by Algorand Foundation shortly before plans had to be published, so projects were requested to keep programs similar to those in the previous period, considering there wouldn’t be time to vote on plans. Hence, you might notice plans are very similar to the last period, such as including COOP in the Meld Gold plan.
In saying that we did increase the COOP / GOLD$ portion, I will reduce this back so it is similar to the last period.
The other element has been that RWA projects like Meld Gold are required to distribute to trading platforms, limiting what can be rewarded. Taking this into account, the other key factor has been to look at TVL as at least a portion of the consideration in where rewards are allocated.
I think TDR needs to be temporary, but the key issue is that it should work alongside other initiatives to ensure it is temporary. For example, other initiatives like more effective trading capabilities (CLAMMs, etc) need to be built to ensure things like TDR are temporary, being used to subsidise less efficient methods in the meantime. There is much more to be said on this point, and it needs an entire discussion. But at its core, I don’t think incentive programs are bad; they are used by businesses of enormous scale every day effectively with a long-term strategy to deliver an ROI. It is that last part we are missing in TDR, which I think is also the point you are making.
I am keen to hear your thoughts (if you are ok to share them) on what you see happening when TDR stops at the end of GP14?
As always thanks for the discussion.
I appreciate you reevaluating the Coop numbers, but I still think it should be zero and that there is nothing actually preventing that (other than outrage from the Coop community). I am never trying to single out communities here, and I often advocate for stuff that would keep me from getting rewards simply because it is what I think is the best thing for the ecosystem as a whole.
Please let me know if you have any feedback with respect to my comments re: Algorai. I did not see any and assume it was just missed.
Regarding your other points, I agree that there are technological things we could do to make trading more efficient. I’ve been saying that some thing for while. And yes, my point is that we are not seeing a ROI, and part of it seems to be that there never was any sort of strategy (either mid or long term) for what TDR was meant to achieve beyond just “make TVL number go up.” 2 years in and we are no closer to understanding what exactly all this money spent was supposed to accomplish, much less whether it has achieved those goals.
As far as what will happen when TDR stops, I expect TVL to drop because yield farmers stop being able to yield freebies. But, that was always going to be the case eventually when we didn’t start with (or ever develop) a plan for what we were trying to accomplish, and how to make everything “sticky”. Paying people to provide liquidity is fools errand unless you are also building a reason for them to keep that liquidity parked after the freebies run out (because unless you have an infinite money glitch, the freebies must run out eventually).
Hey @GhostOfMcAfee
Happy new year, apologies for the slow reply.
Coop wise, there are a couple of things.
Due to not having a vote we were required to keep the plans similar to last period which included Coop.
The Coop CRV has committed a chunk of permanent liquidity to these particular pools so it is one of the few instances that is help reward and compound sticky liquidity.
Algorai, sorry I didn’t reference this well. The TVL comment related to this. Meld Gold business model works similarly to Circle in that it generates income from the assets being held. So, its core focus is onretaining and growing TVL (particularly at a lower APR cost). For more traditional Gold holders (what we see as the most significant potential market), easier, lower-risk DeFi opportunities are a crucial starting point. So, it is a combination of the 2.
I agree the strategy has just been “make TVL number go up” or I could also phrase it as “TVL not go down” which I do think the study from the Tinyman team did show it has generated growing activity (based on a variety of metrics). My argument has been that this can still be weaved into a broader strategy that can run parallel with an end goal. At its core, my point throughout the process has been what happens when TDR stops. It either continues indefinitely (money glitch) or it has to have a strategy around where we need to be when it stops with the idea TDR was enough of an incentive for people to try the products, get comfortable, and build enough confidence to grow their positions and by the time the program is completed the organic utility has grown to replace the subsidies. This isn’t where we are today.
The is a whole other set of factors to include here as well of course, me saying the above makes it sound simple when there is a spectrum of different elements and parties involved. In terms of the spend one element that did play in for the Algorand Foundation was these were rewards carved out of governance rewards so essentially destined as rewards somewhere that period rather than being a new spend. Governance voting helped to firm this up, which is another conversation regarding how voting works and how confident we can be in the process. There have certainly been some odd results and we are missing a lot of data, like how has seeing the current vote percentages impacted the next voter?
In short, I think we are arguing the same points, but I probably disagree that incentivising specific pairs is substantially better than others in the long run. The difference is marginal without the broader strategy for DeFi also being in play. For example, key AMM pairs like GOLD/ALGO are likely to be the least sticky without rewards, being technically some of the highest risk and then financially poor (negative) performers without incentives. If the plan were to technically improve the swap infrastructure to allow high volume trading without needing insanity level liquidity depth by bringing in a high caliber market maker to allow every Algorand user to trade (as a minimum) USDC to ALGO as they would on any CEX I would feel very different.
In saying all this I am open to be swayed, I am not cemented in any of these thoughts. Also there is a lot of depth to some of these discussion areas and I am always up for the conversation maybe holding a space to talk through some of these points might be helpful as well?
Thank you Michael. Always a pleasure. I have a feeling the that to truly get anywhere, we need the Foundation in on these conversations. But, I have no idea if they would listen. The forced eleventh-hour nature of this most recent Gov/TDR decision makes it seem like nobody is truly paying attention to the issue or interested in community feedback.