Beets Budget 2025 Q2

Introduction

Based on previous governance decisions Beets has moved to a quarterly budget system, to provide governance-controlled flexibility and enable the protocol to adapt emissions to changing market conditions while safeguarding the token supply and community interests.

As a reminder, 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 approved 2025 Q1 Budget (which is currently the basis for protocol management) has a time frame from the launch on Sonic (mid-December) until the end of March. The 2025 Q2 Budget will have a time frame of April - June. For a smooth transition, the new budget should be discussed and approved by the end of March.

The proposal for the 2025 Q2 Budget will consist of two parts:

1. Overview of the Q1 Budget (March information not included)
2. Proposal for the Q2 Budget itself

Overview of the Q1 Budget

A total of 5,000,000 BEETS tokens were minted for Q1. By the end of February, a total of 3,135,000 BEETS tokens had been used. The maBEETS incentives going directly to the Fresh Beets pool have been set at 70,000 BEETS/week and will all be used up by the end of March.

A total of 420,000 BEETS has been distributed based on each gauge vote. With two more gauge votes in March, this will be supplemented by the MD Discretion.

The MD Discretion has been mostly used to add extra BEETS incentives to pools outside of the gauge vote results. With the ~480,000 to be used to supplement the March gauge votes and the extra incentives not yet decided, there’s a possibility that we end up with a ~500,000 BEETS surplus by the end of March.

The total protocol fees were $85,996 in January (includes December values for stS and Sonic DEX) and $107,921 in February. The distribution was set based on the 2025 Q1 Budget. Sonic FeeM has now been launched, but was not claimable before March. It did not end up being feasible to deploy Beets validator for Sonic in Q1, but it is expected to come in Q2.

By the end of February, a total of 2,327,981 BEETS had been bought back from the open market. 1,291,284 BEETS were distributed as protocol bounties for the Sonic gauge votes and 1,036,697 BEETS were stored to be repurposed in the Q2 Budget. One can notice a discrepancy between the Fantom DEX fees in January and the amount of BEETS bought back – since it was under Q1 budget, then the amount bought back also includes the Fantom DEX fees from December (which were relatively higher than they have been afterwards). This is a one-time oddity due to starting the budget system mid-December.

Proposal for the 2025 Q2 Budget (April - June)

1. BEETS to be Minted / Repurposed for the Upcoming Quarter

Discussion 1: We are proposing to set the total budget for the Q2 to be 7,000,000 BEETS. Based on January and February information, we can expect to have about 1,500,000 BEETS coming from buybacks and 500,000 BEETS from leftovers of Q1. That means we would additionally mint approximately 5,000,000 tokens. The final number would be found after March fees have been processed.

Compared to Q1, the number of BEETS to be minted will stay relatively similar. Sonic network is booming and we would like to make sure our budget allows us to make full use of both current and potential upcoming opportunities. Maintaining a high TVL share of the network also means Beets will be high on the Gem received list, increasing the value of the Beets S1 Fragments.

2. BEETS Allocation for the Upcoming Quarter:

Q2 budget will cover a total of 13 weeks with 7 gauges votes. For most of Q1 the maBEETS pool has been directly incentivized with 70,000 BEETS tokens per week. We propose to keep this on the same level, with a total of 910,000 BEETS set to go towards the maBEETS pool.

Additionally, in Q1 we have commonly distributed 420,000 BEETS based on the gauge vote results (coming from Gauge Vote incentives and MD Discretion). As Beets members have likely noticed, the gauge vote efficiency (or bribe ROI) has been very low for the past gauge votes, since protocol bribes exceed the value distributed based on the gauge vote results. We are exploring new ideas to again open up the gauge vote to external projects. We propose to set the Gauge vote budget to 2,100,000 BEETS (300,000 per gauge vote) with the plan to continue supporting it with MD Discretion for now.

The rest of the BEETS emissions would be under MD discretion, with the aims to use the BEETS for: (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

Discussion 2: We are proposing the following adjustments to the revenue allocation compared to the Q1 budget:

1. Instead of a 50/50 split, 100% of the Fantom DEX Fees will be used for Beets buybacks (to be used in Q3 budget). Since we expect the fees from Fantom to continue decreasing, then this is mainly adjusted to simplify the fee processing workload.

2. 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. As mentioned, we’re exploring ideas for potential adjustments for opening up the gauge vote for external projects, which might be introduced in a separate BIP.

3. With the proposed changes to the Optimism fee split to better align with Balancer’s fee structure, we’ll have separate fee structures for v2 and v3 pools, with extra distinction between core and non-core pools. Due to this, we’re actually unable to set fixed percentages for the full Optimism DEX fee allocation, with the current numbers set based on the v3 deployment core pool fees (70% to be recycled as voting incentives, 15% to Balancer DAO, 15% to Beets DAO). In all cases, the split will follow the same system, where X% is recycled as voting incentives and the rest split evenly between Balancer DAO and Beets DAO. We propose to additionally split the Beets DAO revenue 50/50 between treasury (for veBAL/vlAURA acquisition) and BEETS buybacks (to be used in Q3 budget).

4. We propose to keep the stS fee allocation the same, with 20% going towards incentivizing stS usage on Sonic network and the rest split evenly between DAO treasury and BEETS buybacks (to be used in Q3 budget). The system for incentivizing stS usage on Sonic is currently being finalized internally, with the plans to share it with the DAO members shortly.

5. Sonic Fee Monetization (now online) and Sonic Validator (expected to launch in Q2) revenue will continue to be split equally between DAO treasury and BEETS buyback (to be used in Q3 budget).