Leveraging Balancer & Aura to Reduce SYN/ETH Emissions

context: https://forum.synapseprotocol.com/d/245-leveraging-balancer-aura-to-reduce-syneth-emissions

Summary:

Synapse DAO’s most liquid trading venue, the SYN/ETH pool on SushiSwap, has accumulated over $10m worth of liquidity due to SYN incentives emitted to LPs. By migrating liquidity to Balancer & migrating incentives to Hidden Hand vs. direct emissions, Synapse DAO can deepen liquidity further.

Terms:

At current, the rewards contract distributes 0.0976 SYN per second to staked LPs. This amounts to roughly 8,400 SYN per day, or approximately ~$12,000 worth of incentives a day. This is dripped block by block to LPs staked in the contract.

Synapse DAO can both increase the yield of the pool and reduce SYN spend by migrating to Balancer gauges and vlAURA voting incentives.

Should this proposal pass, Synapse DAO will begin a gradual migration of liquidity and incentives from Sushi to Balancer/Aura.

The first phase will reallocate 15,000 SYN a week, or a quarter of the existing incentives, to vlAURA Hidden Hand incentives, for one gauge voting cycle (two weeks). Simultaneously, Synapse DAO will migrate its protocol-owned liquidity to Aura to ensure robust pool depth from day one. The second phase will reallocate 25,000 SYN a week, or 45% of the voting incentives, to vlAURA Hidden Hand incentives, the next voting cycle. Then finally, ending the migration, Synapse DAO will allocate 35,000 SYN a week to vlAURA voting incentives permanently, ending Sushi incentives.

At this point, based on efficiency of vlAURA incentives, the pool should have deeper liquidity and Synapse DAO would have reduced its Pool 2 spend by 40%, or over $2m worth of SYN per year.

To benefit from the voting incentives in full, all SYN/ETH Balancer LPs will need to stake their liquidity on Aura.

Evaluation of Success:

Should this proposal pass, Synapse DAO stakeholders should seek to evaluate the success of the proposal after four months (after 8 voting cycles) have elapsed. If no alternative is proposed, the incentive program will continue.