Reduce ACX emissions to ACX LPs

Author(s): ACX Emissions Committee (Kevin Chan, David Korpi, Ryan Carman, Dylan O’Reilly, Chase Coleman) Status: Proposed Related Discussions: Previous Snapshot Proposal, Reduce ACX emissions forum post, Emissions committee

Summary:

The Across DAO should decrease ACX emissions for Across ACX LPs. The ACX liquidity pools are rewarded a high APY in comparison to the utilization of the asset or necessity of the emissions. The ACX Emissions Committee only has permissions and a framework to control ACX emissions for ETH, USDC, USDT, and DAI. We are putting together this one-off proposal to decrease ACX emissions in a similar way to ETH, USDC, USDT, and DAI. A similar proposal was made in August 2024; however, it failed to pass due to circumstances at the time. Given much healthier liquidity in the ACX token and strong fundamentals, it makes sense to revisit this proposal now. Reducing unnecessary ACX emissions will alleviate potential selling pressure from this excess supply of ACX tokens.

Motivation:

The Across DAO should optimally manage ACX emissions for all liquidity it incentivizes. One way that we have done this previously is by creating the ACX Emissions Committee (AEC). The AEC uses a transparent and restrictive framework to adjust emissions awarded to Across ETH/USDC/USDT/DAI LPs. The framework monitors the utilization and comparable yield alternatives of each asset to make ACX emissions adjustments. Across ACX LPs were excluded from the AEC's purview because there are no comparable yield alternatives for ACX and there are other considerations for this asset when we think about the "optimal" ACX emissions for this asset.

ACX emissions for ACX LPs were initially set high to incentivize ACX airdrop recipients to not immediately sell their tokens and to get these token holders familiar with the reward locking mechanism. It’s been over 2 years since the launch of the token and the current level of emissions is not necessary. These emissions were reduced over a year ago, but a further reduction is now necessary. ACX utilization consistently sits close to zero given a lack of bridging needs. Yet, the emissions rate for the ACX LP is by far the highest at 26.3k ACX per day. This is over one third of all daily emissions and nearly exceeds the sum of emissions being used for ETH, USDC, USDT, and DAI - assets that are heavily bridged on Across.

The bottomline is that the Across DAO should decrease ACX LP base emissions by 50% from 15k ACX per day to 7.5k ACX per day.

Specification & Implementation:

The ACX LP emissions are currently 15,000 ACX per day. Our proposal is to lower this to 7,500 ACX per day. If approved, this will be implemented by the AEC.

Rationale:

Rationale is described above. Please also reference the logic from Dylan's comment on the forum thread.

Downside (Cons):

As highlighted in the discussion forum, there is the potential that some ACX LPs withdraw their funds and sell -- The AEC believes that this will be a relatively muted effect as the ACX LPs are still receiving a significant amount of emissions. In addition, the liquidity of the ACX token has significantly increased as multiple large centralized exchanges have listed ACX since this reduction was last proposed. As an illustration, the 30 day average daily ACX volume since August 2024 has increased from ~$1mm/day to over $30mm/day today. The market should be able to absorb any weak holders of ACX and should be better at efficiently representing the fundamental value of Across protocol.

Voting:

A yes vote means that you would like to decrease the ACX emissions being paid to ACX LPs from 15,000 ACX/day to 7,500 ACX/day.

A no vote means that you would like the ACX emissions being paid to ACX LPs to stay the same.