Governance Proposal 24: Polygon & Lending Rewards Optimization

Context/Background

The ApeSwap team of Core Contributors are proposing changes to several of the allocations within the 11 BANANA emitted per block in order to maximize efficiency and ensure the long-term sustainability of the protocol.

This includes changes to:

1. the amount of BANANA allocated to be used as rewards in the ApeSwap DEX on Polygon
2. the amount of BANANA allocated to be used as rewards in the ApeSwap Lending Network

Summary

The first proposed change is to reduce the amount of BANANA used as rewards in the ApeSwap DEX on Polygon from 1 BANANA per block to 0.9 BANANA per block (0.1 BANANA difference).

The second proposed change is to reduce the amount of BANANA used as rewards in the ApeSwap Lending Network from 1 BANANA per block to 0.85 BANANA per block (0.15 BANANA difference).

Finally, the ApeSwap DAO proposes that the community grant the ApeSwap Core Team the flexibility to change these allocations further in order to support the goal of maximizing efficiency in BANANA emissions and ensure the long-term sustainability of the protocol.

The Dexenomics team plans to monitor the changes in real time to ensure it doesn’t materially impact TVL and volume. All changes going forward would be backed by data, similar to the process used to implement the Gauntlet optimization that has been very successful.

Motivation

The ApeSwap DAO has used the Gauntlet optimization process to great effect to reduce excess emission of BNB Chain rewards, and the DAO expects that a similar optimization process applied to Polygon rewards would further lengthen the protocol’s run of BANANA emissions. Reducing the rewards by .1 BANANA per block would allow the DAO to test the elasticity effect on TVL and volume of a small reduction, and then evaluate if further changes would benefit the protocol (and by extension, BANANA token holders).

Apetastic has provided additional detail on the reasoning behind proposed changes to lending network rewards here.

Between these two reductions, the protocol would hold an additional .25 BANANA/block in reserve, which represents around $200k in annualized savings at current prices.

Options

PASS - If this proposal passes, ApeSwap will reduce the amount of BANANA used as rewards in the ApeSwap DEX on Polygon from 1 to 0.9 BANANA per block, and will also reduce the amount of BANANA used as rewards in the ApeSwap Lending Network from 1 to 0.85 BANANA per block. The ApeSwap Core Team will also be granted the flexibility to make further changes to these allocations going forward in order to preserve the long-term sustainability of the ApeSwap DAO.

REJECT - If this proposal is rejected, ApeSwap will not make changes to the allocations of BANANA emissions towards the ApeSwap DEX on Polygon or the ApeSwap Lending Network, and both will remain at 1 BANANA per block. Any changes to these amounts would have to be passed through a separate round of governance.