[BIP-342] Reallocate wstETH/wETH Protocol Fees [second vote]

Voting ended over 2 years agoSucceeded

title: [BIP-XX] Reallocate wstETH/wETH Protocol Fees author: @Llamaxyz - TokenLogic created: 2023-06-06

Summary

This publication presents the Balancer community an opportunity to bootstrap the wstETH/bb-a-wETH pool by redirecting protocol fees used for bribes from wstETH/wETH to wstETH/bb-a-wETH pool.

Abstract

This publication proposes reallocating the bribe portion of Protocol Fees from the wstETH/wETH pool to the wstETH/bb-a-wETH pool. If the pool was fully migrated, the yield from the Aave wETH Linear Pool (bb-a-wETH) will provide the following benefits:

Additional yield for Liquidity Providers (approx. 1.2%)
Boost the Hidden Hand bribe flywheel (approx. 50%)
Generate additional revenue for Balancer DAO ($0.26M)

Assuming 95% of the 32,060 wETH are deposited into Aave v3 earning 2.41%, Balancer DAO is expected to earn an additional $0.26M in additional annual revenue.

Motivation

The wstETH/wETH pool is a "core pool" under BIP-19 with 50% of the pool generating yield. This means 32.5% of yield generated by this pool is then used for bribing votes on Hidden Hand.

This publication proposes redirecting the bribe portion of the protocol fees towards the wstETH/bb-a-wETH pool. The wstETH/bb-a-wETH pool replaces the wETH with bb-a-wETH and generates additional yield and revenue for Liquidity Providers (LP) and Balancer DAO respectively.

If 95% of the 32,060 wETH in the wstETH/wETH pool was deposited into Aave v3 via bb-a-wETH to earn 2.41%, then an estimated 734.01 wETH in yield would be generated and 251.10 wETH would be directed towards bribes. The results is an approximate 50% increase in bribe funding, assuming wstETH averages 4.82% APY, and would help sustain the pool.

Separate to the additional bribe wETH flows, the Balancer DAO will generate an additional 135.21 wETH in revenue, valued at $0.26M from the wstETH/bb-a-wETH pool relative to the wstETH/wETH pool.

Specification

The bribe portion of the ProtocolFee from wstETH/wETH is to be redirected to bribes for wstETH/bb-a-wETH.

Pools:

Disclosure

This proposal is the sole work of @Llama contributor, @Matthew_Graham, via the legal entity TokenLogic. Llama is a Service Provider to Aave DAO.

Copyright

Off-Chain Vote

Yes, let's do it

4.57M vlAURA99.8%

No, this is not the way

10.15K vlAURA0.2%

Abstain

0 vlAURA0%

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Discussion

[BIP-342] Reallocate wstETH/wETH Protocol Fees [second vote]

Timeline

Jun 22, 2023Proposal created

Jun 22, 2023Proposal vote started

Jun 26, 2023Proposal vote ended

Jan 17, 2025Proposal updated

Abstract

Additional yield for Liquidity Providers (approx. 1.2%)

Boost the Hidden Hand bribe flywheel (approx. 50%)

Generate additional revenue for Balancer DAO ($0.26M)

Assuming 95% of the 32,060 wETH are deposited into Aave v3 earning 2.41%, Balancer DAO is expected to earn an additional $0.26M in additional annual revenue.

Motivation

The wstETH/wETH pool is a "core pool" under BIP-19 with 50% of the pool generating yield. This means 32.5% of yield generated by this pool is then used for bribing votes on Hidden Hand.

Separate to the additional bribe wETH flows, the Balancer DAO will generate an additional 135.21 wETH in revenue, valued at $0.26M from the wstETH/bb-a-wETH pool relative to the wstETH/wETH pool.