Lip-14: A very significant change to mechanics, an OTC deal, and rebuilding liquidity

GM Sers,

Today I present to you a fairly complex proposal that has a lot of moving parts so i will try to it relatively straightforward and a little light on the specifics but make sure that all of the relevant aspects are mentioned, for specific details please ask questions under the forum post.

Step 1 of this proposal will change the rake structure of the protocol. Currently 70% of weekly revenues are harvested from the protocol to be used to distribute to stakers and 30% is retained in the market contracts as reserve liquidity. This proposal will readjust there parameters such that only 20% of weekly revenues go towards stakers, 30% is still retained in the market contracts and 50% of it will be directed to this new campaign aimed at rebuilding liquidity in the $lode token. This will be better detailed later in the proposal, but first i want to acknowledge that this radically reduces the staking rake from 70% of weekly fees down to just 20%. This is a 75% reduction in expected APR from staking the lode token.

Step 2 of this proposal will make a 1 time OTC trade with community member thenaller exchanging 9500 usdc for lode at the current market price which stand at $ 0.00458. This will allow thenaller to acquire a significant sum of the lode token without incurring any slippage. This trasaction alone will make thenaller the single biggest holder of lode and afford him vast amount of governance power in the project going forward. The source of these tokens will be the unutilized v3 liquidity in the Camelot liquidity pool and the Lodestar treasury. Thenaller has committed to deploying these lode tokens to be used in the system described in the next step.

Step 3 of this proposal involves creating a new voting option in the weekly gauge that is effectively a vote to build liquidity with emissions instead of paying them out. This option is somewhat unusual becomes users who elect to vote for this option will be voting to have less rewards every week. The proportional % of the vote who elected this option will be directing the proportional share of half that weeks reserves to this program on a given week. These lode will be used to pair against the assets from step 1 that are removed from the current staking rake, in addition to the OTC usdc supplied by thenaller to the lusdc/lode and lweth/lode LPs on camelot. The funds will deployed over a period of time that will be disclosed in a vesting schedule posted at the bottom of the proposal. This spreading out of the funding will allow time to measure the impact of the changes and to validation of the concept to see if we would like to continue the program. Due the substantial voting power of thenaller from this aforementioned OTC trade for lode and commitment to exercise his voting rights towards this option, a significant amount of LODE emissions will be directed into the program even every other user chooses to vote for something else.

The point of this proposal at the end of the day is clearly the the current staking rewards aren't working to create interest in the market buying lode tokens and we are in a situation where the liquidity for the token has collapsed. The lode LPs are virtually all lode tokens paired against no hard assets. This is truly the doom spiral of a token where because theres no liquidity left, anyone who tries to sells craters it toward 0 faster and faster as theres just no eth, leth or lusdc left in the pools for them to exchange their lode for. This proposal primarily seeks to accomplish that goal, there are some smallers goals that this will also look to accomplish such as creating a sustainable incentive plan, and transition our PoL to be more weighted to the ltoken strateg. We will be assessing the impact of this proposal at the start of Q3 to make sure its working, otherwise it may discontinued.