GP9 Measures DRAFT - DeFi Rewards

DeFi Allocation: 50% of the total Rewards

The community voted strongly to allocate 25M of Algo, from the total 50M Algo available rewards in GP8, to DeFi, with 7.5M Algo distributed directly by the projects through the Targeted DeFi Rewards (TDR) program. The Foundation believes that this more targeted use of rewards has benefited the Algorand ecosystem.

The total amount available for governance rewards distribution in GP10 is 30M Algo and this measure proposes rebalancing the allocation up to 50% of governance rewards to DeFi, including the Targeted DeFi Rewards.

(The Foundation supports option A.)

Measure - Should the DeFi rewards allocation for the next quarter be 15M or 12.5M Algo per quarter?
A Allocate 15M Algo for Q1/2024
B Allocate 12.5M Algo for Q1/2024

Targeted DeFi Rewards Approval

The Targeted DeFi Rewards (TDR) have been deployed during the last three quarters by DeFi dApps to support a wide spectrum of initiatives aiming to acquire and retain users, as well as maintain ecosystem TVL.

Governors have shown their support for DeFi on Algorand by overwhelmingly voting to allocate more funding to both DeFi rewards and Targeted DeFi Rewards programs.

Whereas the TDR program was drafted without much data to inform the criteria for the Terms and Conditions (T&C), now that we have seen its effects on the ecosystem, the participating projects are looking at ways to improve the program’s qualifying and distribution criteria.

The DeFi committee, composed of members of the top 10 DeFi protocols, have started to discuss how the terms and conditions of the program could be modified to guarantee a more fair distribution, but in spite of everyone’s efforts, the T&C review has not progressed to a level that would allow for community review this quarter. Therefore, we will not seek to increase proportionally the amount distributed until this review is completed and reviewed by the community in Q1/2024.

This measure seeks governors approval to run the Targeted DeFi Rewards program in Q1/2024, allocating 7.5M Algo as in Q4. The TDR total amount will be taken from the overall amount approved for DeFi (15 or 12.5M).

(The Foundation supports option A.)

Measure - Should we run the Targeted DeFi Rewards program in Q1/2024, distributing 7.5M Algo?
A. Yes
B. No

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the defi committee meeting need to be public so we know what they are talking about and to be sure no one puts their business first instead of the chain and defi on it. its a huge joke that nothing is public, especially if they cant get stuff done as we can see here because no new T&C. TVL shouldnt count alone for these rewards but i bet some of the committee members didnt like getting less


The idea is to change the TDR criteria so that TVL is not the only metric. However, the different types of protocols equal different criteria, requiring more time to find the right balance.

Everyone on the committee has a business in the ecosystem and of course, they want to make their business profitable, but they also want to see Algorand succeed. It’s less about value-extraction, but rather about how to properly assign value.

these protocols clearly dont care because TVL for goAssets, wAssets and gALGO are double counted everywhere. so they clearly like to extract as much rewards as they can


Hey Lobo,

Shaman here :smile:

First, I think hosting things publicly, or at the very least providing meeting notes after, is important and agree with this.

Now of course this is a “trust me bro” without that, but as a fellow committee member I can say that the committee has been a lot more efficient and fruitful, even though there is no new T&C, the work done behind the scenes has been quite in depth. We all are in agreeance that counting just TVL is not the best program to have, and recognizing that all TVL is not equal. We are looking at quite a variety of metrics to add on here, but finding a balance between weightings and creating safeguards to prevent any abuse is at the top of my mind.

I also will say for as much as businesses typically lobby for their own interest, there has been a lot of good will in this process and I would say the projects are all operating in good faith. You know my stand point on community first and being sure we operate with integrity. I know it doesn’t suffice but hope it at least brings some optimism on the process.

Always feel free to DM me and we can discuss!


then show what you have right now. just because i know you i have to treat you the same way. show the community something


The proposal is a little confusing on something. Where do the targeted defi rewards come from? Is it taken from the 15M (option A) or 12.5M (option B) allocation?

Or is entirely outside the 30M allocated to governance rewards for the period? I think this needs to be made a little more clear.


I fully support the defi rewards as it definitely attracts more liquidity directly into the Algo ecosystem.

From 30 million available, 15 Million will go to Defi? From that 7.5 million goes to targeted defi rewards.

The most important thing is targeted defi rewards… Who gets the other 7.5 million algos?

I say put more into targeted defi rewards so users benefit directly…

Who gets the other 7.5 million? this extra 7.5 million is a waste.

Why not increase the amount of targeted defi rewards to be all 15 million? Instead of 7.5 million?

TDR comes out of the amount approved for DeFi, whereas NFT and xGov come out of the vanilla.

We will only propose an increase to TDR after the new T&Cs are ready.

30M Total rewards for Q1
with either
15 or 12.5M for DeFi, including TDR if approved.
leaving either
15 or 17.5M to vanilla governance and NFT rewards
where if approved,
NFT rewards would either be 500 or 650K.

Important to remember that if we have less than 1M Algo left for xGov after this voting session the top-up will come out of vanilla.


Although there has been progress in the discussions, the current draft is too incomplete. I’m hoping there will be a shareable version within the next 4 weeks.


came to this topic because saw soem mentions in the discord :wink:

tbh it baffles me how noone from the twitter personalities has brought this up before, i thought it’s jsut me. Thank you for pointing it out!

best business model in algo defi is is to come to algo, make some wrapped algo token, lets call it xyzAlgo, and then do a nice farm with decent apr of the said token(ideally for LP of xyzAlgo/algo) and wait for people to go nuts by counting on the governance defi rewards. If you stop governance, half of the ecosystem dies.

Not saying there is anything wrong with this, as proejcts simply saw the oppurtunity and banked on it. good for you. But is this realyl somethign that actually benefits algo ecosystem? So if you now put these same people on the council deciding about thsi stuff, you are guaranteed nothign will change.

just my 5 cents on teh topic, i’m leeching these defi rewards myself, but whole algo activity lives and dies around gov cycles.

edit: just, to hammer it a bit further - when was the last time any of you used any of these xyzAlgo tokens for anything other than farming more governance rewards?


The whole wrap ALGO farm it and use a lot of the defi incentives to pump the farm is so stupid. It does nothing for the ecosystem except paying people to stay

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I don’t think it’s bad, it’s means of temporarily soaking up excess Algo due to the flood of accelerated vesting. The gov rewards also continue to be reduced (look at the number by year).

This is a bad rationale imo.
That excess algo can get “soaked” up in vanilla governance, or in defi governance. Locking it up in LST(liquid staking) e.g. galago,malgo etc… and rewarding it with extra apr form defi+targeted defi rewards makes no sense. These rewards are supposedly there to offset impermanent loss associated with defi + to incentivize people to participate in defi. Neither of this is acomplished by LTS pairs.

edit: to further paint the picture, as per latest transparency report 44% of ALL algorand TVL is galgo liquid governance, so this is even with ignoring the targeted defi rewards, taking away 44% of all defi rewards for doing practically nothing .- no impermanenet loss, no real value(correct me if i’m wrong here) besides farming its apr provided by AF.

edit2: i’ve ilustrated my point here and on discord(as did many others), if defi council and people responsible for governance can’t see this issue, then we really ngmi.

I agree with you that mAlgo or gAlgo on its own doesn’t seem like it should qualify for defi rewards, unless it’s put in a liquidity pool. As has been mentioned, it’s virtually the same as plain vanilla governance other than the (small) SC risk.

I also am unclear why TDR comes out of governance rewards (vanilla or defi) as they don’t require any commitment. I mean I’m all for inentivizing defi that doesn’t require commitment, but taking it from defi governance rewards effectively penalizes people who not only commit for three months, but are also actually participating in the ecosystem.


Hello I had no idea that mAlgo and gAlgo can be used to gain defi rewards as well.

I think using common sense we can deduce that holding mAlgo and gAlgo should not qualify for defi rewards.

Unless of course you use mAlgo or gAlgo and add it into a pool with another token for trading… Say you providing liquidity into a pool consisting of gAlgo & Defly token… then ok, you can qualify for defi rewards through your LP tokens…

But there is no difference between mAlgo, gAlgo, and Algo - holding any of these tokens should only make you eligible for the regular vanilla governance rewards.

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the question is if xyzALGO paired with ALGO should earn defi rewards, i dont think so. gALGO-ALGO pools have so much TVL but so little volume. its the easy no risk strategy that makes gALGO viable but outside of farming no one cares about gALGO really. they should incentivize some liquidity in stableswap pools but not waste that much of their defi boost for it like now

Yes I agree with you, that’s what I actually meant… Maybe I didn’t convey it clearly, but I meant to say that only.

if you provide liquidity into a pool consisting of gAlgo/mAlgo/Algo + any other token out there thats not Algo or anything else thats 1:1 with Algo, then you should be eligible for rewards.

Why would anyone add liquidity into a pool consisting of 2 of the same tokens - that’s just stupidity and makes zero sense, and does not enhance anything.

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As of now only 3,02,000 ALGO approved on xGov. It may go up to 500,000. I suggest to top up as soon as this session is over. Smaller the pool, more difficult it will be for bigger projects to get their funds approved via voting.

If pool is small, bigger projects will not have an incentive to place their proposals in season 3 and only smaller projects will get approved, which may even reduce the total amount approved in next session when compared to session 2.

We need more participation from projects and community every session for xGov to grow.