Beets Budget 3 (Q3 2025)

Introduction

From the launch on Sonic Beets has moved to a quarterly budget system, with the aim to provide governance-controlled flexibility and enable the protocol to adapt emissions to changing market conditions while safeguarding the token supply and community interests. Under this system, the Music Directors present a BEETS budget for the DAO approval every three months for the upcoming quarter. The budget outlines the number of BEETS to be minted for the following quarter and their allocation within the ecosystem. Additionally, the budget sets the distribution of the protocol revenue for the upcoming quarter.

The second quarterly budget (Apr-Jun 2025) concludes by the end of June. The 2025 Q3 Budget will have a time frame of July - September. For a smooth transition, the new budget should be discussed and approved by the end of June.

The proposal for the 2025 Q3 Budget will consist of two parts:

• Overview of the Q2 Budget (June information not included)
• Proposal for the Q3 Budget

Overview of the Q2 Budget

Total budget for Q2 was 7,000,000 BEETS tokens, which were made up as follows:

The following table shows the total Q2 allocations and end of May values:

By the end of May, 5,020,000 BEETS tokens had been used. All of the leftover Q2 Budget is planned to be used by the end of June as follows:

1. 280,000 BEETS - maBEETS pool incentives
2. 630,000 BEETS - BEETS distributed based on the gauge vote results
3. 1,070,000 BEETS - BEETS distributed based on the MD Discretion

The allocations for protocol revenue distributions have followed the Q2 Budget. The following table shows the revenue from various sources and the corresponding allocations:

*Treasury - Towards DAO treasury; maBEETS - Towards BEETS buybacks to be used as protocol bounties on Sonic gauges votes; BEETS BB - Towards BEETS buybacks to be used in the next budget; Other - Extra incentives and revenue share with partners **As mentioned in the Q2 Budget proposal, with the launch of v3 on Optimism we have different fee structures for v2 and v3 pools and thus the total Optimism allocation percentages are an approximation.

By the end of May, a total of 4,420,559 BEETS had been bought back from the open market. 3,263,631 BEETS are used as protocol bounties for the Sonic gauge votes and 1,156,928 BEETS were stored to be used in the next quarterly budget. Extrapolating this value we can estimate to acquire a total of ~1,700,000 BEETS towards the Q3 budget from Q2.

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Proposal for the 2025 Q3 Budget (July - September)

1. BEETS to be Minted/Repurposed for the upcoming quarter:

Discussion 1 We are proposing to set the total budget for the Q3 to be 7,200,000 BEETS. Based on the current Q2 Budget information we are estimating to have about 1,700,000 BEETS coming from Q2 Buybacks and not have any surplus from Q2. That means we would additionally mint approximately 5,000,000 BEETS tokens for Q3. The final number would be found after May fees have been processed.

For Q2 we minted 5,097,973 BEETS, meaning we are looking to mint approximately 8.7% more. For comparison, our yearly max inflation of 10% would allow us to mint approximately ~5.9M BEETS per quartet on average. Since we are still exploring suitable options for the Season 2 Sonic Airdrop, then we believe we should make sure we have enough incentives on our own, even if we do not actually end up using all of them by the end of Q3.

2. BEETS Allocation for the Upcoming Quarter:

Q3 Budget will cover a total of 13 weeks and 6.5 gauge votes. We proposed to distribute a total of 2,730,000 BEETS based on the upcoming gauge votes. This would allow us to continue distributing 420,000 BEETS per gauge vote with an average weekly distribution of 210,000 BEETS.

A large change from the previous budgets would be to stop directly incentivizing the maBEETS pool. The current distribution gives the maBEETS pool 0.13% - 3.30% APR (depending on the relic level) from the total APR of 2.12% - 87.04%. Since the BEETS used to incentivize the maBEETS pool are rather insignificant, then we propose to stop incentivizing it with extra BEETS rewards.

We propose to set the MD Discretion to 4,470,000 BEETS. As mentioned, we are still exploring suitable options for the Season 2 Sonic Airdrop and having extra available BEETS might become important to maintain the strong position Beets currently has in the Sonic ecosystem. Overall, the MD Discretion aims to use the BEETS by: (a) Adding extra incentives to pools that are deemed important; (b) Helping bootstrap new promising pools; (c) Incentivizing the usage of stS on Sonic ecosystem; (d) Increasing the amount of BEETS to be distributed by the gauge vote.

3. Protocol Revenue Allocation:

*Since Optimism has various fee splits for different pool types, then the values are an approximation

Discussion 3 We are proposing to keep the protocol revenue distribution similar to Q2:

1. Sonic DEX fee allocation will stay the same, with 30% going towards DAO treasury and 70% used for BEETS buybacks. These BEETS are placed to gauge votes as protocol bounties, making sure we maintain the flywheel effect of the well-earning pools.

2. 100% of the Fantom DEX Fees will be used for Beets buybacks (to be used in Q4 budget).

3. Optimism DEX values were slightly adjusted based on the new fee structure. Approximately ~70% of the fees will be recycled as voting incentives and the rest split equally between Beets and Balancer.

4. We continue to use 20% of the stS fees to incentivize stS usage on Sonic ecosystem, which is currently being done through stS Seasons and Stake It To Make It programs. Rest split equally between DAO treasury and BEETS buybacks (to be used in Q4 budget).

5. All the revenue from Sonic Validator and Sonic FeeM will be split equally between DAO treasury and BEETS buybacks (to be used in Q4 budget).