GIP 106 - Intent to shift GEAR liquidity incentives to Gear/wETH Balancer Core Pool

Purpose This proposal authorizes the effort of seeking core pool status for a GEAR/wETH pool on Balancer. Should Core Pool status be granted, this proposal pre-approves the shift of GEAR liquidity incentives from Curve to Balancer.

Execution The following steps would be executed:

1. Ov3rkoalafied to deploy 50/50 GEAR/wETH pool on balancer, 1% fee tier.
2. Ov3rkoalafied to submit a proposal to balancer seeking core pool status for the GEAR/wETH pool
3. Should core pool status be granted, Gearbox multisig will shift GEAR incentives from the curve pool to the new balancer pool. Direct incentives would still be utilized (not vlAura bribes), unless changed in a future proposal.
4. After the core pool has been live for a period of time, I recommend re-evaluating the GEAR incentives for a potential reduction.

Reasoning: In a typical Balancer pool, 50% of the generated fees go to LPers, 12.5% goes to the Balancer DAO, and 37.5% to veBAL lockers. In a Balancer Core Pool, 50% of fees go to LPers, 12.5% goes to the Balancer DAO, and 37.5% is used to bribe veBAL/vlAura voters to vote for the Core Pool. This means that a portion of fees generated by the GEAR/wETH pool would go directly to incentivizing liquidity, rather than generally to veBAL lockers.

The expectation is that a Core Pool can sustain more liquidity with the same incentives than a standard liquidity pool.

The fees from the 1% fee tier are expected to outpace the anticipated reduction in volume. This is typically the case with 1% fee pools (ALCX/ETH being a good example). Additionally, fees on trade most greatly affect traders, not investors. In effect, the fee costs traders a bit more with the benefit of making GEAR/wETH liquidity provision more sustainable.

To add some estimates: Gear/weth ranges between about 50k and 200k/day of average volume, per https://curvemonitor.com/#/platform/pools. At $50k/day, that would amount to $50k x 365 x 1% x 37.5% = $70k annual bribes for the pool. At 200k/day, that goes up to $280k. At the current pool size of $3.6m, assuming an Aura bribe multiplier of 1.25, that amounts to an APR of between 2.5% and 10%. **With more significant volumes, the pool could potentially be self-sustaining. ** Note that the projected APR could be expected to be lower if volume is reduced due to the higher fee, however a few high volume days can easily make up for that. The peak volume day is $840k so far, which alone would generate $3k of incentives.

Voting For, against, abstain.