[PIP-10] Reduction in the lending & borrowing incentives

Motivation: Driving protocol adoption remains one of the most important priorities for Pine with V3 of the protocol being progressively rolled out. Adoption is crucial to the Pine’s mission to build a long term sustainable operation. As a result, starting with PIP-3, incentives to borrowers and lenders has been active, with over 800,000 $PINE rewarded to active users over the past month. With changing market conditions, we believe that it is important to reevaluate the amount of rewards given out within each epoch cycle. Hence this proposal explores a reduction of 50% in the amount of weekly rewards given to borrowers and lenders.

Specifications: The initial specifications provide 208,000 $PINE from the Incentives pool as reward for protocol usage each week. The distribution of tokens among the pools will be based on the level of activity and demand for each pool. The proposal is to reduce the incentives of future epochs to be in line with the following specifications.

The proposal is to reduce the 208K $PINE in weekly incentives to 104k $PINE to be allocated different categories of protocol usage and the breakdown is as follows: For Borrowers: 42% of the rewards will be allocated to borrowers, pro-rata to the amount borrowed. This pool will incentivize users to borrow assets on the platform. 18% of the rewards will be allocated to borrowers who use NFTs as collateral on the Pine Protocol, pro-rata to the value of the NFTs (valued at floor price) escrowed. For Lenders: 28% of the rewards will be allocated to users whose permissioned WETH are lent out, pro-rata to the amount lent out. 12% of the rewards will be allocated to users who permissioned WETH on the platform, pro-rata to the amount permissioned. Snapshot will be taken on an hourly basis to determine the allocation of the rewards for that hour. Borrowers and lenders can see the amount of rewards they earn every hour but can only claim the reward at the end of the epoch. Conclusion: Incentivizing users to participate in different activities on Pine Protocol will increase the platform’s adoption and usage, ultimately making the operation sustainable. At the same time, ensuring emissions of incentives are in-line with protocol usage and adoption are also crucial. This proposal aims to bring the current weekly emissions to be more in line with current market conditions and protocol demand. Copyright: Copyright and related rights waived via CC0.