QIP181: Stop QI Vault Incentives

Author: Benjamin.lens

The time has come to end QI vault incentives for minting MAI. This proposal seeks approval to end all QI emissions to the vault incentives program.

Motivation

Incentives

Currently, the DAO emits 150k QI per week for the purposes of incentivizing the minting of MAI against approved collaterals. At current market prices, this equals $15k and represents 26% of QI emissions. During the bull market, this system allowed QiDao to grow its TVL and created a thriving vote incentives ecosystem. The last 2 voting rounds have yielded 1.2% and 2.6% in annualized returns from voting incentives.

As market conditions worsen, this system has become unprofitable for QiDao. Below is a breakdown of the revenue dynamics.

Revenue dynamics

Vaults that have received more than 5% of vault incentives over the past 15 weeks, accounting for as much as 97% of vault incentives in any given week, represent only 38.97% of repayment fee revenue. This means that 61.03% of repayment fee revenue comes from virtually non-incentivized vaults. Out of these vaults with low to no incentives, DAI and WETH-related vaults account for most of revenue.

Mitigants

The most recent collateral additions have received grants for partner vault incentives. So far, LDO, OP, and METIS have been received for incentivizing minting MAI. Moving forward, the BD team will push for these sorts of deals. This way, QiDao will remove the need to have QI vault incentives.

Competitive landscape

Many of the assets onboarded to QiDao, like Curve LPs and yvTokens, are not accepted by other major lending and stablecoin platforms. Hence, there’s no competition for such deposits. For assets like stETH, ETH, and BTC, which are accepted by other stablecoins and lending platforms, QiDao is by far the cheapest option for borrowing without any incentives.

Quorum Standards

The option with the most votes will be adopted.

Options

End QI vault incentives Further discussions needed