QIP177: Implement incentive safeguard guidelines

Vault incentives were created to increase demand for vaults and increase protocol revenue, but the current incentive system is being gamed where illiquid and inaccessible vaults are received the majority of incentives.

If this QIP is adopted by the community, the following guidelines are to be adopted to remove the net negative effects to the protocol caused by emitting incentives to unprofitable and illiquid vaults.

1. The protocol should incentivize highly liquid collaterals to improve the strength of MAI overcollateralization. These are collaterals rated at B- or higher according to the risk assessment matrix.

2. Any collateral falling into a C range grade (C+, C, C-) or lower will be disqualified from receiving vault incentives unless the available on-chain liquidity is higher than the available debt ceiling and trade slippage for stables suffers less than a 10% loss at 50% of the total MAI borrowed.

3. Collateral vaults with no available debt ceilings where the debt ceiling cannot be raised due to liquidity concerns for a period lasting longer than 30 days will not be eligible to receive vault incentives. If debt ceiling has not been raised due to peg concerns, but token liquidity is high, the vault will be eligible for rewards.

4. Any collateral vault marked for deprecation or already deprecated will be disqualified from receiving vault incentives regardless of risk grading.

5. Vaults containing stablecoins as collateral are disqualified from receiving incentives.

Collaterals will be assessed by the protocol against these guidelines prior to each vault incentive gauge vote to assess eligible vaults.

QiDao Risk Matrix: https://mai.watch/

Quorum Standard

The option with the most votes will be adopted.

Options

1. Implement incentive safeguard guidelines
2. Further discussion needed