Summary

Pool2, the RULER/ETH liquidity pool on Sushiswap and xRULER stakers are both incentivized with RULER token emissions. The main reason behind the emissions being dispersed to these groups is to reward long term token holding.

Currently, the RULER/ETH SLP emissions are set at 3000 tokens per week. While the xRULER emissions are set at 700 tokens per week. There is an imbalance of incentives for long term token holders who stake their farmed/bought RULER in xRULER compared to those providing liquidity in Pool2.

The result of this imbalance is causing collateral pair LPs to look past staking their farmed RULER in xRuler, and instead, realizing instant profit. This is causing a negative feedback loop by decreasing xRULER effectiveness, while LPs in Pool2 suffer from constant profit taking. The cycle repeats...

The goal is to have RULER token holders feel comfortable keeping their tokens in xRULER and want to continue to be long term holders!

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Current APYs (at the time of this proposal):

• Pool2 - 180% APY
• xRULER - 54% APY

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Specifications

Decrease Pool2 emissions by half from its current 3,000 token a week emission schedule to 1,500 tokens a week. Pool2 may lose some liquidity due to this change, but the team will monitor liquidity closely.

Allocate those cut emissions (up to 1400 tokens per week) from Pool2 towards xRULER, the APY will go from 54% APY to at least double that, given one of the “For” options are passed by this vote.

There will be no increase in total emissions from this proposal, simply an allocation change.

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Projected xRULER staking APYs at the time of this proposal (2 options):

• Allocating 100 more tokens a day on top of the 100 being distributed already. Making xRULER emissions 200 tokens a day. Estimated 136% APY (taking in account daily compounding).
• Allocating 200 more tokens a day on top of the 100 being distributed already. Making xRULER emissions 300 tokens a day. Estimated 262% APY (taking in account daily compounding).

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Projected Emission Change Outcomes:

• Pool2 LPs will feel more comfortable knowing less RULER will be dumped on the market due holders wanting to stake in xRULER.
• Pool2 LPs will stake into xRULER to continue to grow their long term position.
• Long term token holders and farmers of RULER will have greater incentive to stake in xRULER.
• Instant profit taking should lessen and a more positive feedback loop can take place.
• xRULER will grow faster, increasing borrowing power but also making it safer for lenders given a conservative mint ratio is in place.

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If option “For 1” is passed, any leftover RULER not used from the Pool2 cut (800 tokens per week) will remain in the multisig.

If option “For 2” is passed, any leftover RULER not used from the Pool2 cut (100 tokens per week) will remain in the multisig.

Again, there will be no increase in total emissions from this proposal, simply an allocation change.

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Voting options

• For 1: Halve Pool2 emissions + 100 additional RULER a day to xRULER
• For 2: Halve Pool2 emissions + 200 additional RULER a day to xRULER
• Against: Do nothing