APGP 16: V1 Incentives reduction

Summary:

Proposition for progressive reduction of V1 incentives

Context:

APWine protocol V1 is currently deployed with a set number of pools and incentivisation over its liquidity (directed through the gauges). Liquidity mining was voted initially to allow bootstrapping the liquidity on the different pools, currently following the distribution voted with APGP 14.

While the V1 was a success as it brought the primitives designed from 0 to 1, bringing up to 25m$ TVL at some point, the V1 is no longer in the user acquisition phase, as we are getting closer to V2 (in the pipeline for almost a year now, with a private beta recently announced for before xmas). The V1 represents a non-negligible maintenance cost for its app (mostly), and unnecessary complexity in terms of integrations (changing contracts’ interfaces). As such, we are proposing a plan to progressively reduce incentives.

A progressive reduction of those rewards would result in less dilution of the current holders, avoiding spending unnecessary/organic rewards for a rather low TVL atm. We believe this would represent a long term benefit for the protocol, also saving treasury reserves (which could eventually be used as incentives in the next iterations).

The distribution of LP rewards in its current state is a transition that is aiming to last until the next version of the protocol is released. The goal is to reduce token emission in the meantime while user acquisition is very low to keep as much dry powder as possible for the next release.

Note: the incentivisation of the voting escrow voted with APGP 10 would not be affected by this proposal.

Rationale:

We are proposing a linear increase of the reduction factor:

(with x>33)

With an index of the reward weekly period (currently 34). Starting from cycle 36 (24.11.2022-1.12.2022), we will update our distribution formula to reduce the token distribution and progressively deprecate V1 liquidity while still maintaining a baseline for current LPs and stakeholders. The updated formula would results in the following:

Cycle 36 (24.11.2022-1.12.2022): 19’355 APW

Cycle 37 (1.12.2022-8.12.2022): 16’762 APW

Cycle 38 (8.12.2022-15.12.2022): 14’992 APW

Cycle 39 (15.12.2022-22.12.2022): 13’686 APW

etc.

Means

Dev & operational work

Update the rewards formula of the rewarder