PTIP-27: POOL incentive adjustments and buy back

Simple Summary

Continue POOL distribution. Lower distribution rates on Dai and USDC prize pools. Begin using a portion of each week’s reserves to buy back POOL.

Motivation

Improve overall tokenomics by optimizing POOL distribution rates and initiating a POOL buy back. This also sets the stage to more aggressively build prize pools on Polygon where lower gas costs enable more users.

Overview

The second period of POOL distribution is ending in the next ~10 days. This proposal:

• Renews POOL distribution at the same rate for COMP, UNI, POOL, and SUSHI prize pools.
• Decreases the distribution rate for USDC and Dai prize pools by 29% each, in aggregate this reduces total daily emissions by 20%. Details here 3.
• Begins using 75% of weekly reserves intake to buy back POOL (~$2,500 - $3,500 daily).

Rationale

POOL Distribution Rates

The majority of POOL distribution is going to the Dai and USDC prize pools. Reducing those two prize pools by 29% each amounts to a reduction in total daily POOL emissions of 20%. The last reduction in distribution rates had a positive effect and the goal is to achieve a similar effect now (maintain deposited value while lowering POOL distributed). This reduction also us to begin using POOL incentives on Polygon where lower transaction fees attract many more users.

Improving Incentives

PTIP-25 doubled the rewards for POOL depositors. This proposal builds on the theme of improving incentives for POOL holders by using a portion of the reserves accrued each week to buy back POOL. This POOL can then be sent to be distributed to POOL pool depositors. This will serve as a short term improvement well Llama DAO does more in depth research (PTIP-26 1) on larger adjustments.

Due to the fact that Llama DAO research is pending a larger changes are anticipated in the near future the initial implementation of the POOL buy back will be manually via a 2 of 3 multi-signature wallet with @TheRealTuna, @RegisIsland, @underthesea as signers. This proposal will fund the wallet with USDC and buy backs will be carried out. This will be a short term solution while larger changes are evaluated.

Technical Specification

The technical specification lays out the technical details of what is being proposed. This may include:

• Transfer POOL to UNI, COMP prize pools to maintain POOL distribution at current rate

• Transfer pPOOL to the SUSHI prize pool to maintain distribution at the current rate

• Decrease USDC daily distribution rate from 1,400 to 1,000 POOL

• Decrease Dai daily distribution rate from 700 to 500 POOL

• Adjust COMP reserve rate from 100% to 99% (house-keeping change for improved user experience)

• Transfer $100,000 USDC to buy-back multi-sig