BIP-51: Diversifying the Gauge Bounties

Proposal

This proposal presents an opportunity to reassess and diversify the current reliance on bought-back BEETS as a means to incentivize maBEETS voters. The proposal seeks to replace the current model with one that rewards these holders with Beethoven X BPTs rather than BEETS tokens, essentially providing users with a basket of assets. This provides maBEETS voters with real yield and encourages it to stay. In addition to this the following BIP outlines an avenue for the use of the FTM gas monetization money as a means to bolster these incentives. In order to achieve these goals a number of actions will be required as outlined below.

1. Change buy back from protocol fees
2. Allocate quarterly reward from the FTM Gas Monetization Program

Motivation

As stated above, the goal of this proposal is to diversify the gauge bounties incentives. The proposal is split into different sections that all aim for this goal but in different ways.

1. Change buy back from protocol fees

With the approval of BIP-24 (https://snapshot.org/#/beets.eth/proposal/0xe1489639baffe5bb8117da677349a67e80197ab6d34d5efb1b49786ca76cf83a), BeethovenX DAO started buying BEETS with 30% of protocol fees earned each month. These have been distributed as gauge vote incentives for top performing pools.

Allocating 30% of protocol fees towards gauge bounties for top performing pools had a positive impact on the performance of these pools, there is no intention to change this. However, the proposal is to stop buying back BEETS with 30% of protocol fees and instead use the fees to convert into a BPT and distribute such BPT as voting incentives. Which BPT it is converted to will be up to the Music Directors discretion, but will most likely be a BPT of a top performing pool.

This change should achieve the following: a) Add real yield as voting incentives b) Chain aligned voting incentives c) We generate TVL by converting to BPTs d) BPTs are value accruing, as swap fees are compounded into them e) maBEETS voters are more likely to stake the BPTs 2) Allocate reward from the FTM Gas Monetization Program

Fantom runs a program where 15% of the gas used by enrolled dApps can be earned back via the Gas Monetization program. In addition, a quarterly bonus is paid out to the top projects as ranked by total gas usage of their included contracts. Details of the program can be seen here: https://fantom.foundation/blog/gas-monetization-introducing-the-quarterly-bonus/

The total earn rate will be volatile and subject to changing network and dApp usage but calculations using data from the last 3 months shows monthly earnings of ~27000 FTM, including the quarterly bonus. This calculation was made during an extraordinary period (Multichain incident) so future numbers may differ.

The earned rewards do not currently have a specified use and are accumulating in the DAO Treasury. This proposal would see up to 100% of the rewards from this program be used as Beethoven-X gauge vote bounties, with allocation between gauge pools kept proportional to the value of publicized gauge bounties. This allocation would include all gauge bounties - whether posted by Beethoven-X or by third parties, although Music Directors would retain the right to exclude specific bounties from the program in cases of potential exploitation of the system. An example of such cases would be where a bounty is placed using a high nominal value of a relatively illiquid asset for which realization of the nominal value can not be reasonably expected for those receiving the bounty.

The motivation for this proposed change is to increase incentives for participation in Beethoven-X governance.

Impacts/Risk Assessment

This proposal would mean increased gauge vote incentives without diluting potential third party bounties increasing participation in the maBEETS governance system.

The use of Gas Monetization rewards in this involves a reduction in DAO Treasury retained earnings, although the change may potentially contribute to greater overall earnings through increased maBEETS participation. The distribution method used may entail fees being paid to third parties (for example Votehoven), which reduces their value to the DAO by a corresponding amount.

Specification/Execution Plan

Following the adoption of this BIP the Composers and Music Directors will change the methodology that was being used for buybacks in regards to maBEETS voting incentives and use the USDC fees earned to create BPTs and use these as voting incentives Gas monetization rewards will be harvested on a monthly basis, with each month’s rewards being applied to the following month’s gauge votes and the quarterly bonus being divided equally over votes in the following quarter. Distribution of these added bounties would be via a mechanism decided by Music Directors, and would likely follow the same route as the existing protocol supplied maBEETS gauge bounties. For clarity, the currently used mechanism is distribution via Votehoven.